FSTVX or FZROX

[NBKCF]

Hey Bogleheads,

I am getting ready to transfer a previous company's Roth 401k to a soon-to-be opened Roth IRA. My plan was to roll it over to FSTVX, but should I consider FZROX? I am somewhat skeptical about how new the FZROX fund is so I was wondering if that should be a reason for concern.

Thanks for the help.

[NYC_Guy]

At 1.5 basis points of expense, I would use FSKAX (the successor to FSTVX). Probably doesn’t matter, though, in a tax-advantaged account (where you don’t care about tax efficiency of the fund).

[mcraepat9]

In a Roth IRA, the distinction between the two will be meaningless. Not worth your time to worry about. Pick one and move on.

[nix4me]

FZROX

[radiowave]

At 1.5 basis points of expense, I would use FSKAX (the successor to FSTVX). Probably doesn’t matter, though, in a tax-advantaged account (where you don’t care about tax efficiency of the fund).

+1 FSKAX (previously FSTVX) has a long track record and at 0.015% ER that's pretty competitive compared to Vanguard and Schwab equivalent mutual funds.

[NBKCF]

Is FSTVX no more? This is the first I am hearing of FSKAX.

[nix4me]

Correct - Fidelity consolidated and removed minimums.

[sarabayo]

Is FSTVX no more? This is the first I am hearing of FSKAX.

Fidelity unified the share classes of a bunch of their funds over the last few months. FSTVX has been rolled into FSKAX, which has a lower expense ratio of 0.015% compared to FSTVX which used to be 0.04% if I recall correctly. These changes were announced alongside the announcement of the "zero" funds like FZROX, but apparently few people paid attention to that part of the announcement Another even more important part of the announcement was that Fidelity has reduced minimum initial contributions on many of their index funds to $0. I think that's even more important than the debut of the new zero-expense funds because it means that people who are just getting started with investing won't need to save up to reach a minimum initial contribution requirement if they go with Fidelity, unlike Vanguard where you need to save up $3000 before you can start buying into most of their funds. (Vanguard's target date funds only require $1000, but Fidelity's $0 still has Vanguard beat on that point.)

Anyway, to answer your original question, I'd go with FSKAX. It has a longer track record, it follows an independent third-party index, and it owns more individual stocks than FZROX. The slightly higher ER of 0.015% compared to 0% is really not important IMO.

[nix4me]

Or you could look at the FZROX performance and see that it exactly tracked the total market performance since inception and pay no fees.

[sarabayo]

Or you could look at the FZROX performance and see that it exactly tracked the total market performance since inception and pay no fees.

Here's FZROX vs FSKAX since the inception of FZROX:



If you make a prediction from this plot by annualizing the difference in return, FZROX will underperform FSKAX by 1.11% annually, which is horrible.

Of course, this means nothing since it's barely been 5 months since FZROX came into being. Furthermore, when you say it "exactly tracked the total market performance" you don't specify what index you're talking about. FZROX and FSKAX follow different indices so they're not 100% comparable in the first place.

[StrangePenguin]

Or you could look at the FZROX performance and see that it exactly tracked the total market performance since inception and pay no fees.

Here's FZROX vs FSKAX since the inception of FZROX:



If you make a prediction from this plot by annualizing the difference in return, FZROX will underperform FSKAX by 1.11% annually, which is horrible.

Of course, this means nothing since it's barely been 5 months since FZROX came into being. Furthermore, when you say it "exactly tracked the total market performance" you don't specify what index you're talking about. FZROX and FSKAX follow different indices so they're not 100% comparable in the first place.

Try changing the start date on that morningstar chart to 8/3/18 instead of 8/2. The FZROX jumps out to a slight lead. Something weird happened on Day 1 of the fund but it probably isn't indicative of what happened after or will happen in the future.

[nix4me]

Portfolio visualizer shows same performance on VTSAX, FSKAX and FZROX - within a few dollars. It doesn't matter, the performance is spot on and picking either won't matter. The tin foil hats come out when Fidelity is mentioned.

Use any of these:
FZROX
FSKAX
VTSAX
VTI
VOO
ITOT
IVV

You will perform like "the market"

[sarabayo]

Try changing the start date on that morningstar chart to 8/3/18 instead of 8/2. The FZROX jumps out to a slight lead. Something weird happened on Day 1 of the fund but it probably isn't indicative of what happened after or will happen in the future.

Yup, that's right. I just chose that start date because nix4me specifically said "since inception". As I said in the second part of my post, nothing about that chart is really indicative of what will happen in the future.

[sarabayo]

Portfolio visualizer shows same performance on VTSAX, FSKAX and FZROX - within a few dollars. It doesn't matter, the performance is spot on and picking either won't matter. The tin foil hats come out when Fidelity is mentioned.

I mean, yeah, they're both close enough. But if I had to pick one I'd still put FSKAX just slightly above FZROX due to lack of track record so far, and lower number of stocks sampled.

[NBKCF]

Thank you all for the very detailed responses and comparison between the funds. Seeing it laid out eases my mind with my choice since it ultimately doesn’t matter. I can’t believe I missed the FSKAX announcement.

[SpringMan]

Fidelity's zero expense ratio funds are great in tax advantaged accounts. One problem with holding them in a taxable account is one can't change brokerages without selling and repurchasing the the new brokerage's fund and that makes for a taxable event. I highly doubt in-kind transfers would be accepted at other brokerages. I don't know this positively, just a hunch. I may be wrong.

[DaftInvestor]

Or you could look at the FZROX performance and see that it exactly tracked the total market performance since inception and pay no fees.

Here's FZROX vs FSKAX since the inception of FZROX:



If you make a prediction from this plot by annualizing the difference in return, FZROX will underperform FSKAX by 1.11% annually, which is horrible.

Of course, this means nothing since it's barely been 5 months since FZROX came into being. Furthermore, when you say it "exactly tracked the total market performance" you don't specify what index you're talking about. FZROX and FSKAX follow different indices so they're not 100% comparable in the first place.

Try changing the start date on that morningstar chart to 8/3/18 instead of 8/2. The FZROX jumps out to a slight lead. Something weird happened on Day 1 of the fund but it probably isn't indicative of what happened after or will happen in the future.

The problem might be morningstar - go graph it elsewhere (e.g. Yahoo for instance) and you will see FZROX in the lead.

OP: I would go with FZROX. Only time will tell which of the two might have some slight advantage in other ways; but the one thing we know for sure is that FZROX has a small advantage in fees.

[Jack FFR1846]

On 8/6, I split my FSTVX potion in 2. Half staying in FSTVX (which became FSKAX) and half in FZROX. Why? I saw it as a low risk to see how the new zero fund (with cool theme music) would do. As of yesterday:

FSKAX: $289,358.55

FZROX: $289,406.83

These are in a tIRA, so I won't see any tax treatment differences. If you're looking at taxable, you'll want to do a bit more research. My very preliminary conclusion is: "it doesn't matter" wrt my own choice between these 2 funds.

[UpperNwGuy]

On 8/6, I split my FSTVX potion in 2. Half staying in FSTVX (which became FSKAX) and half in FZROX. Why? I saw it as a low risk to see how the new zero fund (with cool theme music) would do. As of yesterday:

FSKAX: $289,358.55

FZROX: $289,406.83

These are in a tIRA, so I won't see any tax treatment differences. If you're looking at taxable, you'll want to do a bit more research. My very preliminary conclusion is: "it doesn't matter" wrt my own choice between these 2 funds.

Thanks for doing this experiment!

[NBKCF]

On 8/6, I split my FSTVX potion in 2. Half staying in FSTVX (which became FSKAX) and half in FZROX. Why? I saw it as a low risk to see how the new zero fund (with cool theme music) would do. As of yesterday:

FSKAX: $289,358.55

FZROX: $289,406.83

These are in a tIRA, so I won't see any tax treatment differences. If you're looking at taxable, you'll want to do a bit more research. My very preliminary conclusion is: "it doesn't matter" wrt my own choice between these 2 funds.

Excellent information! Thanks!

[mcraepat9]

On 8/6, I split my FSTVX potion in 2. Half staying in FSTVX (which became FSKAX) and half in FZROX. Why? I saw it as a low risk to see how the new zero fund (with cool theme music) would do. As of yesterday:

FSKAX: $289,358.55

FZROX: $289,406.83

These are in a tIRA, so I won't see any tax treatment differences. If you're looking at taxable, you'll want to do a bit more research. My very preliminary conclusion is: "it doesn't matter" wrt my own choice between these 2 funds.

+1, glad we needed an experiment to prove this.

[DaftInvestor]

On 8/6, I split my FSTVX potion in 2. Half staying in FSTVX (which became FSKAX) and half in FZROX. Why? I saw it as a low risk to see how the new zero fund (with cool theme music) would do. As of yesterday:

FSKAX: $289,358.55

FZROX: $289,406.83

These are in a tIRA, so I won't see any tax treatment differences. If you're looking at taxable, you'll want to do a bit more research. My very preliminary conclusion is: "it doesn't matter" wrt my own choice between these 2 funds.

Funny - I did something similar (not to track - since we could do that anyway - but just because I couldn't make up my mind ).
I did the same with international.
I'm now thinking of moving the rest to Zero to simplify - are you going to continue with your experiment or converge down to Zero?