FNILX vs. FXAIX - Which Fund is Best For You?

Investing can be a complex endeavor, but understanding the nuances of different investment options can lead to better results.

In this comprehensive comparison, we delve into two favored Fidelity funds – FNILX and FXAIX – to determine which might be the best fit for your investment portfolio.

FNILX and FXAIX: An Overview

FNILX is the Fidelity ZERO Large Cap Index Fund, which tracks 500 large-cap U.S. companies. As the name suggests, there is no expense ratio charged to investors.

FXAIX is the Fidelity S&P 500 index fund that tracks the S&P 500 index, which is nearly identical to FNILX. However, FXAIX charges an expense ratio of 0.015%.

Even though FNILX does not charge an expense ratio, the downside is that the fund only pays dividends once a year.

On the other hand, FXAIX pays quarterly dividends, allowing your investment to compound more effectively.

What is FNILX (Fidelity ZERO Large Cap Index Fund)?

FNILX is known for its no-fee structure, with an expense ratio of 0.00%. It targets U.S. large-cap stocks and has about 500 different holdings, offering a broad market exposure.

FNILX employs a passive investment strategy, aiming to replicate the returns of its benchmark index and invests in a diverse array of large U.S. companies.

While it doesn’t technically track the S&P 500, the holdings still include the top 500 large-cap U.S. companies as determined by the fund managers.

What is FXAIX (Fidelity 500 Index Fund)?

FXAIX mirrors the performances of S&P 500 firms, charging a minimal fee with an expense ratio of 0.015%.

FNILX vs. FXAIX Expense Ratio Comparison

FNILX has a 0.00% expense ratio, whereas FXAIX charges a minimal 0.015% fee.

Both are extremely low, making them extremely cost-effective options regarding management fees.

FNILX vs. FXAIX Dividend Yield Comparison

One of the main differences between FNILX and FXAIX is the dividend payout frequency.

FNILX pays a dividend annually, while FXAIX pays a dividend quarterly, making FXAIX the better option for dividend investors.

FXAIX has a dividend yield of around 1.47%, while FXAIX has a dividend yield of 1.31%, giving FXAIX the dividend edge again.

FNILX vs. FXAIX Holdings Comparison

FXAIX specifically tracks the S&P 500 index, while FNILX tracks 500 large U.S. companies.

Yes, this means they track essentially the same stocks, but technical FNILX is different since it isn’t directly tied to the S&P 500 index.

Both funds target 500 large-cap U.S. stocks, but FXAIX is specifically the S&P 500 index.

FNILX vs. FXAIX Performance Analysis

The performance comparison is subtle due to their similar investment strategies.

Historically, FNILX and FXAIX have closely followed the performance of the S&P 500 index almost perfectly.

However, it is possible that FNILX will invest in slightly different holdings in the future, considering it doesn’t specifically follow the S&P 500 index.

Choosing the Better Option

Deciding between FNILX and FXAIX comes down to whether you want quarterly dividends or no expense ratio.

FNILX's zero expense ratio is attractive, but FXAIX's slightly better dividend yield and payout frequency may appeal to those focused on dividend income.

Additionally, quarterly dividends will allow your investment to compound quicker than an annual dividend.