FZROX vs. VTI: A Comprehensive Comparison
VTI and FZROX are both total stock market funds that invest in virtually every publicly traded U.S. company, but there are some differences.
FZROX vs. VTI Overview
FZROX does NOT have an expense ratio, while VTI charges 0.03%
FZROX is only investable on Fidelity
FZROX pays dividends annually, while VTI pays quarterly
FZROX is a mutual fund launched by Fidelity, recognized for delivering complete exposure to the U.S. stock market with a striking feature: the absence of an expense ratio.
On the flip side, VTI is an Exchange-Traded Fund (ETF) by Vanguard, passively managed to replicate the returns of the CRSP US Total Market Index.
Expense Ratio Comparison
The most distinct trait setting FZROX apart from VTI is its zero expense ratio. This aspect favors investors seeking long-term growth without the drag of expenses.
Meanwhile, VTI has an expense ratio of 0.03%. So, while VTI does not offer no-cost investing, it’s still drastically lower than the industry average.
Dividend Yield Comparison
The main difference between VTI and FZROX dividends is that FZROX only pays once per year, while VTI pays dividends quarterly.
VTI provides a dividend yield of around 1.59%. VTI’s dividends are also qualified, meaning they are subject to a maximum federal rate of 15% or 20%, which is preferable for investors in a taxable account.
On the contrary, FZROX offers a dividend yield of 1.40%, and all dividends may not be qualified since it is a mutual fund.
Holdings Comparison
VTI and FZROX have extremely similar holdings, and the top 10 are nearly identical.
Vanguard’s VTI encompasses over 3,700 holdings, accounting for the overall U.S. stock market, including small, medium, and large-cap equities.
FZROX, although still covering a broad market area, holds around 2,600 stocks, limiting its portfolio diversification compared to VTI.
Either way, they are mostly weighted into similar larger holdings, and both will have similar performance.
Performance Comparison
VTI and FZROX have historically provided investors with nearly identical returns.
The main factors that may affect the performance going forward include the lack of expense ratio of FZROX and the difference in dividend payout frequency.
Ultimately, the lack of compounding from FZROX’s annual dividend payout may cancel out its lack of expense ratio.
Which is Better For You?
Choosing between FZROX and VTI depends on personal preferences and which broker you use.
FZROX is only available to Fidelity customers, while VTI is available on most brokerages.
ETFs are also taxed more favorably than mutual funds, making VTI the better choice for most people!
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FAQ
What is the Vanguard equivalent of FZROX?
The Vanguard equivalent of FZROX is the Vanguard Total Stock Market Index Fund (VTI). Both funds provide comprehensive exposure to the entire U.S. stock market, but they come with fundamental differences in expense ratios and operational structure.
What is the equivalent of VTI in Fidelity?
The equivalent of VTI in Fidelity is FZROX. These funds rival each other as they both aim to provide broad exposure to the U.S. equity market.
