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@jarradMorrow Fidelity been around over 20 years. They are not babies in this game. They have created great returns for years to their clients. If Morgan Stanley and Vanguard can create their own index, why not Fidelity? Your arguement is not valid in this case.
I always wondered what the catch was. When getting my company rollover into Fidelity, I did ask "what's the catch"? The advisor did admit the purpose was to get you to also purchase other items to make their profit. Thanks for providing "the rest of the story"!!!
FNILX and FXAIX has very similar performance, their main difference is the fee. Which will add up over time. Currently have a 4 fund portfolio that utilises 3 of the zero-fee fund: FZROX(45%), FNILX(25%), FXNAX(20%), FZILX(10%)
But the "headline" fees are not the only fees though. For the extended market funds at least, high portfolio turnover translates to higher transaction fees (not included in the nominal fee); that might exceed the managment fee which you are saving.
Excellent review. Owning them in an IRA solves some of these problems. Also, how about comparing performance? The Zero fee funds seem to be doing fine from what have observed. Maybe even slightly outperforming the fee funds?
I just compared FNILX to FXAIX. They are pretty much neck and neck, FNILX a little ahead over 5 years (longest period of time available), and FXAIX a little ahead for 1 year and 3 year. Transferability to another platform does make FXAIX more attractive to me, and I appreciate this video for educating me on that.
Great video Jarrad. My understanding is also that the zero fee funds gives you the dividend once a year vs quarterly. Quarterly might be better specially when shares are at a discount like now. My apologies if you mentioned this and I missed it.
@@dabigdawg42042 Well, if the dividend is reinvested, then only paid out once a year, this makes sense doesn't it? Also, are you certain the dividend is reinvested? As in read it on Fidelity's fund information page or something to this effect? Because I have been looking for a clear answer on what they do with the distributions if they only pay it to the investors once a year.
Hi Jarrad. Good video and you raise great points. I don't think the zero funds are true loss leaders for Fidelity. Even though they are not charging the investors they are certainly profiting. One of the practices that is common in the mutual fund world is share lending. The mutual fund houses lend their shares to short sellers. The zero funds are no exception, as is disclosed in the prospectus documents. In Vanguard's case they pass along the proceeds of share lending to the mutual fund owner. I doubt that is the case for Fidelity. I'm guessing the proceeds from share lending are how they profit.
I'm glad you bring up portfolio turnover percentages. That's very important to keep in mind if these are held in taxable accounts. Many people don't mention turnover.
@@JarradMorrow Could you elaborate on turnover percentages? Not sure what it is an how it's related to taxable accounts, and what the silent expense is.
@@bluegodofspeed - every time a stock gets removed from an index fund, (either through it being dropped from the list, or else partially sold in order to re-balance the portfolio), the owner of the stock (ie, you) will need to pay taxes on any profit from the sale. If an index fund is inside a non-taxable investment account, such as a Roth or IRA or 401k, then there isn't an issue - it's tax-free, so you're not subject to it. (and in fact, this is what mutual funds were originally designed to be used in.) But if you're holding it in a taxable investment account, then you will be subject to paying taxes on those sales at the end of the year. Therefore, an index fund that has high turnover means that the managers are doing a lot of selling of either under-performing stocks, or a lot of re-balancing of over-performing stocks. Which means that, the higher the turnover, the more taxes you will (likely) need to pay. In the past few years, the solution to this was "ETF" - due to the way they are set up and how they re-balance themselves, an ETF is more tax-efficient than a standard mutual or index fund when used in a taxable account. (There's some accounting magic done underneath that makes some of their rebalancing and sales not, technically speaking, rebalances or sales. I think.) However, I THINK the loophole that ETF's use to reduce their taxes is being closed, so they are no longer as efficient. This is also one of the things that financial advisors recommend that you use tax-advantaged accounts to hold different kinds of investments in: my vauge recollection is 1. Hold the things that get taxed a lot, but potentially have lots of growth, in your Roth. (ie, aggressive mutual funds.) 2. Hold the things that increase in value, but don't change or give dividends, in your taxable account. (Thus only taxed at capital gains when you sell.) 3. Hold things that get taxed a lot, but are fairly stable and conservative, in your 401k. (ie, taxed at your income level when you withdraw.) Of course, the whole point of things like timed mutual funds is that you don't need to do stuff like the above - so it's one of those "once you have enough money to care" kinds of things. Personally, I"m right about at that level - I'm 47, and have been consistently maxing out my 401k+Roth most of my working life, so I need to start seriously thinking about these things.
Nobody should be holding mutual funds in a taxable account whether they are zero fee funds or not, due to capital gains distributions. Stick with ETFs that are more tax friendly due to their lower turnover rates and less capital gains distributions. In a retirement account it doesn't matter since the Fidelity Free funds can be sold into SPAXX then transferred. But it is nice to be able to transfer your IRA in-kind to another custodian too.
I have 3 of these zero funds in an IRA so turnover is not an issue. I also hold FNILX in a taxable account. Mutual fund distributions are taxed at long term capital gains rates just as qualified dividends are taxed at lower rates. I have been DCA in my IRA for 1.5 years and I am not terribly disappointed in the funds. But I am not super happy with them as well. I DCA into 4 IRA's with different investments. This one is simply all mutual funds. One is ETF's, the other two are stock.
Very informative! Lots of stuff I didn't know about! I'm not new to adding money to mutual funds, but I am new to the stuff outside the federal government (TSP). Subscribed!
Here is an additional bit of info that is VERY factual about these zero fee funds; Fidelity uses THESE PARTICULAR funds to SELL shares to MANY HEDGE funds -------- TO SHORT! Yes-- it is legal and YES -- Fidelity does it A LOT! This is another way for them to make money off retail investors and they don't even know it is happening! YES-- Fidelity is in a way -- selling shares AGAINST its OWN Customers AND--- it's ALL LEGAL! These funds have MANY shares in companies that ARE IN OTHER Fidelity funds and THESE zero cost funds are ABUSED to SHORT shares so Fidelity CAN BUY shares that THEY have JUST helped SHORT at a LOWER PRICE----- BUT --- for their OTHER FUNDS-- again it is legal! People have so little idea that a MASSIVE amount of shorting that is going on RIGHT NOW -- very much INCLUDES FIDELITY, and in particular shares from these funds!
@@JarradMorrow Agreed. Certain things should be pointed out for consumer saftey. Things like turnover ratio, a potentially biased index, and reduced dividends.
Turnover rate is irrelevant when it is in a IRA account. Large Cap Index Zero Fund FNILX is over 99% the same as FXAIX. The FNILX also out preform probably because of the zero fees. Thanks for sharing the data of the turnover rate and that you can move it from accounts I didn't know that. With the FXAIX being over 99% the same as S&P 500 and in a well trusted company there would be little to no reason to want to move it anyways.
Aww, be nice to Cathy Wood. ARK, which I do not own, has a good thesis. The problem with tech is that it is very difficult to time, possibly taking 30 years, and even when it does, it really needs to undercut existing solutions or it is going nowhere. This can be challenging at first due to disparities in efficiencies of scale. I think it is premature to write off ARK, though certainly one does not need to buy.
I enjoy FZROX and FZILX, but when I started The Extended Zero Fee Fund lacked Tesla and underperformed. Good information that will help me make future decisions about how much to allocated to FZROX and FZILX. Also, do these funds only pay dividends once a year?
Great video. I have been investing in the fidelity 2040 fund for 7 years. It appears to be a zero fee fund. It has a 23 turnover and has a rate fee of .75. If I understand your videos correctly, that is a very expensive fund with a very high turnover rate, I think I should be invested in fxaix which I understand has a higher volatility rate, but I've got two decades left to retirement. My difficulty as I don't quite understand when to remove the money from the 2040 program and place it in the FXAIX what are your thoughts?
I ended up doing my S&P 500index fund in my taxable acct with fidelity since they didn’t require the $3k min investment. Other wise I typically love vanguard. The fidelity ZERO funds seemed too good to be true
thanks for the vid. you should do one about the flaws of Fidelity's cash management and credit card products. electronic transfers, credit card payments, and checks take a long time to be available
Your little Cathie Wood blurb made me LOL. Thank you for that chuckle. I couldn't agree more. I can't understand why she still gets so much airtime. Who could possibly interested in anything she has to say?
My person opinion having the most stocks doesn’t make an index better. And based on comparing performance of total stock market and the 500 more unnecessary exposure leads to lower returns
Don't think I like any of them. The technology is so cutting edge and new that it's tough to tell how it'll all play out. Because of that I'd pass on concentrating into this sector and just buy a total market index which already holds the same companies.
So, I have zero funds for FNILX, FZROX and FZILX-along with S&P FXAIX. ….are you saying if I switched from zero to total market funds then I’ll have to pay capital gains tax?
What if you have the zero base fund in a IRA account and you were to sell it would you still be stuck? as in paying capital gain. I'm assuming with Roth you wont be because you already paid the taxes when your putting money into it.
I don't find Fidelity ETF's totally uninteresting. I had couple of them and they did nothing in terms of growth. And now they are going to charge $100 for purchase of certain types of ETF's. So better not purchase them at all. I will stick with my mutual funds and individual stocks. I am not going to pay exorbitant fees. Those days are over.
Hey, Jarrad! If I were to sell these free index funds but then immediately move them to one of the paid ones, wouldn’t I not have to be taxed because the money remains in the retirement/non-taxable account? Basically just reorganizing in that sense.
If it’s in the retirement account, it wouldn’t be taxed, however if in a taxable account regardless of what you do with the money after if you sell you will be taxed.
Yes, that's the case, and one of the reasons mutual funds (in general) were developed was to put them into tax-advantaged accounts such as 401ks or Roths. In those scenarios, it's entirely reasonable to use the zero-based funds....if you're OK with the other issues (ie, the relative lack of diversity compared to the low-fee based ones.)
@@JarradMorrow yes & no... yes because you gave insight & info that i wouldn't have necessarily dug that deep for, no because the funds that suck do for reasons I didn't expect, that don't even make sense. But that's why I follow people like you, Brad and JJ!
Well, you may be correct. However, I'm a true boglehead lol and I like free stuff like zero expense ratio index funds and cheap chicken and hot dogs at Costco so I'll take a gamble on zero comparably. I do not plan on leaving Fidelity so...
I'm so happy she exists so we can use her as the poster child for how someone can be a great talker and marketer, but a horrible investor. Her downfall has broken a lot of uneducated investor's brains. We needed this down market to expose the insanity that's happened over the past 10 years. I don't like seeing people lose money, but this is the only way most will learn how they should be investing their money.
fzrox has zero fee 2200 approx companies but fskax has 4000 approx companies with a very small fee but the returns are greater than fzrox. they introduced these to get the younger crowd in. put my 20 year old in 2 zero fee for roth ira. he will be 401k eligible next year
Simple example why would you might need to change a platform: when I switched my job one of company’s mandatory terms was that all my investments must be under Fidelity umbrella
"and my dog, Molly, who actually just tore up her leg and had to get stitches, by hitting that thumbs up button." I didn't even know that dogs had thumbs.
I wish my shirts determined what the market did 😂. Unfortunately, my reason for wearing tie dye is a lot simpler- the patterns are way more fun to look at when I'm tripping on mushrooms
It's up to you. Investing into these funds aren't going to destroy your wealth, but if you feel a little differently about them after understanding them more then maybe it would make sense to go ahead and start contributing to equivalent funds that track a 3rd party index (with as low of fees as possible). Only do what makes you feel comfortable and will be able to keep you invested (from a behavioral perspective) no matter what.
The dividend is also paid yearly and not quarterly. I still got the FZROX though because I want to keep it simple sweetie. I agree with you on the FSMAX though.
Question: We just bought some of Vanguard's Total Market Fund (VTSAX) with an expense ratio of 0.04%, but I didn't know until this video that Fidelity's equivalent (FSKAX) has an expense ratio of 0.015%... With that in mind, would you recommend FSKAX over VTSAX?
Penny pinching at that point. Either is fine don’t overthink it. Both will have tracking errors & will be a few cents off per share & over the long term that’s the equivalent of the fees, it really won’t make a difference at all. Flip a coin honestly.
Sounds like penny pinching. Both are under 5 basis points for expense ratio. Thus they are both super cheap. The performances are nearly the same. Outside of expense ratio, VTSAX pays dividends more frequently than FSKAX (4 times per year vs 2).
I think I might know why based on the same type of comment I've received in the past. There are two types of HSA's offered by Fidelity. The first is a regular HSA that is self directed and there are no fees on the account. The second is something called a "Fidelity Go HSA" where you pay a monthly fee to have them manage it for you.
@@JarradMorrowthank you for your replying , i understand and ok with fee , but i thought $15 / year not per month. That is why i have to find out with expert to ask that is resonabel and fair since me and my husband dont know much about investment. Im an immigration. Thank you again for your help.
Depends what rate of return you’re assuming. I personally wouldn’t invest money that was needed in that short period of time due to short term volatility in the market
@@JarradMorrow not always, specially when bear markets come, it tends to go lower than the S&P. But in bull markets it, historically, have done pretty well on beating the S&P. The exposition to stocks is more concentrated, specially mid cap companies. Also, it is more expansive than Index fund like IVV or something. The Golden Age of the fund was under Peter Lynch, I wasn’t even born yet at the time, but the current managers seems to have kept his philosophy. I currently don’t have any money on it, their drag downs are usually stronger in bears markets, but I’m watching it.
You know I just found your vid’s and I like them. BUT, I’m a Fidelity guy and you know why I like FZROX it’s ZERO exp. Shit on them all you want, but I’m buying and buying.
Not sure off the top of my head but I'd imagine they're pretty close. The zero fee funds haven't been around for very long so the returns could be a little misleading either way
What I totally dislike about this fund is you cannot purchase limit orders! Also have to wait for purchase to be completed which means you don’t know what price you’re paying if the price moves when you do transaction. Makes me not want to purchase any other Fidelity products! If I’m stuck I will just wait it out. Platform is a fail compared to TD Ameritrade!
One big benefit of the zero fee funds is that you don't have to pay the annual management fee, which can add up over the years. If you hold your funds for decades, these fees can be a significant hurdle. FNILX has average annual returns of 21.74%, 10.23%, 14.35%, and 11.92% for 1 year, 3 year, 5 year, and lifetime respectively. Compare that to S&P 500 (SPY) at 26.19%, 9.96%, 15.61%, and 10.02% for 1 year, 3 year, 5 year, and lifetime respectively. For me, it comes down to performance over the long-term. FNILX wins at 3 years and lifetime, but SPY wins at 1 year, and 5 year. FNILX doesn't have a 10 year track record so I could not compare on that metric.
Past performance isn't a good metric to use when building a portfolio you're investing in for the future. Those gains/losses are already locked in so they don't tell us anything about how things will play out going forward.
1:56 These chickens are perfectly good and safe, regardless of whether they are fed GMO food or not. You should research your ,aims before you blindly make them.
You're comparing funds with drastically different time tables. These zero funds have only been around the last few years. If you look at the volatility index during the covid period, it's obvious as to why a new fund to this period would see a higher turnover ratio as big swings occurred in equities. Additionally why you see low ratings such as the 3 they received from morning star which penalizes for volatility. Also in fairness even small expense ratios have exponential changes on portfolios over long careers. I like your videos but you're leaning click bait on this one.
Certainly no big problems and doubtful you made a case of even a minor problem especially when taking into account the investor drawn to the subject funds.
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@jarradMorrow Fidelity been around over 20 years. They are not babies in this game. They have created great returns for years to their clients. If Morgan Stanley and Vanguard can create their own index, why not Fidelity? Your arguement is not valid in this case.
Hit the follow when you dropped the GMO corn fed comment! Have seen your videos for a while but finally followed. Thanks for the content!
I always wondered what the catch was. When getting my company rollover into Fidelity, I did ask "what's the catch"? The advisor did admit the purpose was to get you to also purchase other items to make their profit. Thanks for providing "the rest of the story"!!!
Glad it was helpful. Thanks for sharing that additional info!
FNILX and FXAIX has very similar performance, their main difference is the fee. Which will add up over time. Currently have a 4 fund portfolio that utilises 3 of the zero-fee fund: FZROX(45%), FNILX(25%), FXNAX(20%), FZILX(10%)
Happy to hear you've found a fund/allocation that works for you. Thanks for sharing 👍
But the "headline" fees are not the only fees though.
For the extended market funds at least, high portfolio turnover translates to higher transaction fees (not included in the nominal fee); that might exceed the managment fee which you are saving.
What are the percentages for?
@@christophertaylor2894 the % that they have invested in each
Excellent review. Owning them in an IRA solves some of these problems. Also, how about comparing performance? The Zero fee funds seem to be doing fine from what have observed. Maybe even slightly outperforming the fee funds?
I just compared FNILX to FXAIX. They are pretty much neck and neck, FNILX a little ahead over 5 years (longest period of time available), and FXAIX a little ahead for 1 year and 3 year.
Transferability to another platform does make FXAIX more attractive to me, and I appreciate this video for educating me on that.
Why do you have to attack my rotisserie chicken habit like that? Haha
😂
Great video Jarrad. My understanding is also that the zero fee funds gives you the dividend once a year vs quarterly. Quarterly might be better specially when shares are at a discount like now. My apologies if you mentioned this and I missed it.
Appreciate it. Great callout on the 1 time per year dividend. I unknowingly overlooked that fact so thanks for bringing it up 👍🏻
this is not true. the dividend is reinvested all year but only shows in statement once per year...
@@dabigdawg42042 Well, if the dividend is reinvested, then only paid out once a year, this makes sense doesn't it? Also, are you certain the dividend is reinvested? As in read it on Fidelity's fund information page or something to this effect? Because I have been looking for a clear answer on what they do with the distributions if they only pay it to the investors once a year.
Hi Jarrad. Good video and you raise great points. I don't think the zero funds are true loss leaders for Fidelity. Even though they are not charging the investors they are certainly profiting. One of the practices that is common in the mutual fund world is share lending. The mutual fund houses lend their shares to short sellers. The zero funds are no exception, as is disclosed in the prospectus documents. In Vanguard's case they pass along the proceeds of share lending to the mutual fund owner. I doubt that is the case for Fidelity. I'm guessing the proceeds from share lending are how they profit.
Good point
I'm glad you bring up portfolio turnover percentages. That's very important to keep in mind if these are held in taxable accounts. Many people don't mention turnover.
It’s the silent expense that everyone pays, but very few talk about or try to reduce/avoid
@@JarradMorrow Could you elaborate on turnover percentages? Not sure what it is an how it's related to taxable accounts, and what the silent expense is.
@@bluegodofspeed - every time a stock gets removed from an index fund, (either through it being dropped from the list, or else partially sold in order to re-balance the portfolio), the owner of the stock (ie, you) will need to pay taxes on any profit from the sale.
If an index fund is inside a non-taxable investment account, such as a Roth or IRA or 401k, then there isn't an issue - it's tax-free, so you're not subject to it. (and in fact, this is what mutual funds were originally designed to be used in.) But if you're holding it in a taxable investment account, then you will be subject to paying taxes on those sales at the end of the year.
Therefore, an index fund that has high turnover means that the managers are doing a lot of selling of either under-performing stocks, or a lot of re-balancing of over-performing stocks. Which means that, the higher the turnover, the more taxes you will (likely) need to pay.
In the past few years, the solution to this was "ETF" - due to the way they are set up and how they re-balance themselves, an ETF is more tax-efficient than a standard mutual or index fund when used in a taxable account. (There's some accounting magic done underneath that makes some of their rebalancing and sales not, technically speaking, rebalances or sales. I think.) However, I THINK the loophole that ETF's use to reduce their taxes is being closed, so they are no longer as efficient.
This is also one of the things that financial advisors recommend that you use tax-advantaged accounts to hold different kinds of investments in: my vauge recollection is
1. Hold the things that get taxed a lot, but potentially have lots of growth, in your Roth. (ie, aggressive mutual funds.)
2. Hold the things that increase in value, but don't change or give dividends, in your taxable account. (Thus only taxed at capital gains when you sell.)
3. Hold things that get taxed a lot, but are fairly stable and conservative, in your 401k. (ie, taxed at your income level when you withdraw.)
Of course, the whole point of things like timed mutual funds is that you don't need to do stuff like the above - so it's one of those "once you have enough money to care" kinds of things. Personally, I"m right about at that level - I'm 47, and have been consistently maxing out my 401k+Roth most of my working life, so I need to start seriously thinking about these things.
@@kevinschultz6091 Thanks for the summary dude!
@kevinschultz6091 thanks for the info, Kevin.
Nobody should be holding mutual funds in a taxable account whether they are zero fee funds or not, due to capital gains distributions. Stick with ETFs that are more tax friendly due to their lower turnover rates and less capital gains distributions. In a retirement account it doesn't matter since the Fidelity Free funds can be sold into SPAXX then transferred. But it is nice to be able to transfer your IRA in-kind to another custodian too.
I have 3 of these zero funds in an IRA so turnover is not an issue. I also hold FNILX in a taxable account. Mutual fund distributions are taxed at long term capital gains rates just as qualified dividends are taxed at lower rates. I have been DCA in my IRA for 1.5 years and I am not terribly disappointed in the funds. But I am not super happy with them as well. I DCA into 4 IRA's with different investments. This one is simply all mutual funds. One is ETF's, the other two are stock.
What's the point of investing in these zero funds if the dividends are like 20 cents a yr?
@@Floyd_SteelI’m assuming when held in a taxable account you will pay less taxes
the fidelity international is FTIHX more than 5,000 stocks
Fidelity is trusted, so if it wanted to create its own index customers would probably not have that big of an issue with it.
Glad they work for you 👍🏻
Fidelity investments second app presently Not working sir, what happend .?
App Running but Dollor symbol Not shown.?
@@upendraprasaddalai9959Dawg this isnt tech support
Terrific man you opened up a line of understanding about index funds that I had not yet heard, but I want to know.
Glad it was helpful! Thanks for the feedback!
The fee-based equivalent to the zero-fee international fund is the Fidelity Total International Index Fund (FTIHX).
👍🏻
Not exactly. FZILX does not include small caps while FTIHX does. It's why FZILX isn't called a _total_ international fund.
Very informative! Lots of stuff I didn't know about! I'm not new to adding money to mutual funds, but I am new to the stuff outside the federal government (TSP). Subscribed!
Here is an additional bit of info that is VERY factual about these zero fee funds;
Fidelity uses THESE PARTICULAR funds to SELL shares to MANY HEDGE funds -------- TO SHORT!
Yes-- it is legal and YES -- Fidelity does it A LOT!
This is another way for them to make money off retail investors and they don't even know it is happening!
YES-- Fidelity is in a way -- selling shares AGAINST its OWN Customers AND--- it's ALL LEGAL!
These funds have MANY shares in companies that ARE IN OTHER Fidelity funds and THESE zero cost funds are ABUSED to SHORT shares so
Fidelity CAN BUY shares that THEY have JUST helped SHORT at a LOWER PRICE----- BUT --- for their OTHER FUNDS-- again it is legal!
People have so little idea that a MASSIVE amount of shorting that is going on RIGHT NOW -- very much INCLUDES FIDELITY, and in particular shares from these funds!
I wasn’t aware of that so thanks for sharing the additional info 👍🏻
Everything gets shorted, who cares?
why not just buy etf ? If not then I’ll go with fidelity funds, vanguard is basically the same funds with more expense ratio
I personally prefer Vanguard ETFs, but some people prefer Fidelity which is fine
FZROX is fine. It's similar to the Schwab 1000 fund. It has outperformed VTSAX/VTI in it's short history according to portfolio visualizer.
I agree it's fine, but there's more to the fund beyond the zero fees that I'm sure a lot of people aren't aware of
@@JarradMorrow Agreed. Certain things should be pointed out for consumer saftey. Things like turnover ratio, a potentially biased index, and reduced dividends.
Show me a full bear and bull cycle before we decide who outperformed who
@@KingJack86 FZROX has finished its bull run, currently going through its bear - it'll be just fine, comparatively speaking.
@@akin242002 gotta disagree with yo views a little bit
Turnover rate is irrelevant when it is in a IRA account. Large Cap Index Zero Fund FNILX is over 99% the same as FXAIX. The FNILX also out preform probably because of the zero fees. Thanks for sharing the data of the turnover rate and that you can move it from accounts I didn't know that. With the FXAIX being over 99% the same as S&P 500 and in a well trusted company there would be little to no reason to want to move it anyways.
Sounds like a bittersweet situation. Wow, not sure to continue investing or not in zero-fee Index funds..
They're not the worst, but do have some flaws that I wanted to bring to light.
This video earned a like in the first 20 seconds. Great sense of humor!!
Thank you!
Aww, be nice to Cathy Wood. ARK, which I do not own, has a good thesis. The problem with tech is that it is very difficult to time, possibly taking 30 years, and even when it does, it really needs to undercut existing solutions or it is going nowhere. This can be challenging at first due to disparities in efficiencies of scale. I think it is premature to write off ARK, though certainly one does not need to buy.
I was just doing research and this helped me trust what I was learning. I didn't know that about the zero fee funds thanks!
Appreciate the feedback. Happy to hear it helped!
I think the more appropriate comparison for the international fund would be FTIHX.
I would go with Fidelity anyway. Vanguard has way too many fees and they charge you about 30 per year for each mutual fund you own in each account.
Does age of the fund have any impact on turnover? It seems like a newer fund would naturally have a higher turnover.
This is a great point. Looks like their PTO has come down quite a bit.
Thanks for the video! You compared turnover and # of holdings, but how about their performance?
The funds haven't been around long enough to be able to give a proper opinion. That sort of thing takes decades to play out.
Great call. The funds have been around long enough.
I enjoy FZROX and FZILX, but when I started The Extended Zero Fee Fund lacked Tesla and underperformed. Good information that will help me make future decisions about how much to allocated to FZROX and FZILX. Also, do these funds only pay dividends once a year?
Yes.
Great video. I have been investing in the fidelity 2040 fund for 7 years. It appears to be a zero fee fund. It has a 23 turnover and has a rate fee of .75. If I understand your videos correctly, that is a very expensive fund with a very high turnover rate, I think I should be invested in fxaix which I understand has a higher volatility rate, but I've got two decades left to retirement. My difficulty as I don't quite understand when to remove the money from the 2040 program and place it in the FXAIX what are your thoughts?
It charges .75%, that’s a long way from 0%
I ended up doing my S&P 500index fund in my taxable acct with fidelity since they didn’t require the $3k min investment. Other wise I typically love vanguard. The fidelity ZERO funds seemed too good to be true
Great videos. Can you do a video on the funds you own?
Yes I can, but to be honest I don't hold anything special
thanks for the vid. you should do one about the flaws of Fidelity's cash management and credit card products. electronic transfers, credit card payments, and checks take a long time to be available
Definitely to attract more customers with freebies. Still they are good funds. Not every Fidelity account has access to zero funds.
They're not horrible at all, but it's always good to be aware of the things that aren't so obvious about the funds
What stops someone from selling these funds while they are in a Roth IRA and swapping the money over to a similar fund that is cross platform based?
Doing that sort of thing within a retirement account would be ideal
@@JarradMorrow new here yo views on this fund us no lie im definitely not joining fzrox no 🎲
Your little Cathie Wood blurb made me LOL. Thank you for that chuckle. I couldn't agree more. I can't understand why she still gets so much airtime. Who could possibly interested in anything she has to say?
My person opinion having the most stocks doesn’t make an index better.
And based on comparing performance of total stock market and the 500 more unnecessary exposure leads to lower returns
Thank you so much for clarifying the cons, which we should know about (along with the possible pros).
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What index or ETF fund do you like for beside ARKG,GNOM for that sector?Thanks new to channel your the best !!!!!
Don't think I like any of them. The technology is so cutting edge and new that it's tough to tell how it'll all play out. Because of that I'd pass on concentrating into this sector and just buy a total market index which already holds the same companies.
So, I have zero funds for FNILX, FZROX and FZILX-along with S&P FXAIX. ….are you saying if I switched from zero to total market funds then I’ll have to pay capital gains tax?
Are the fidelity funds you talk about come with our corporate 401k plans?
No they have an expense ratio inside the 401k
This is all new to me and this has been super helpful. Thank you.
Glad it was helpful!
Amazing and detailed video in such a short period of time. Thank you!
What if you have the zero base fund in a IRA account and you were to sell it would you still be stuck? as in paying capital gain. I'm assuming with Roth you wont be because you already paid the taxes when your putting money into it.
If it’s in an ira, then you can sell and not have to pay any taxes
I don't find Fidelity ETF's totally uninteresting. I had couple of them and they did nothing in terms of growth. And now they are going to charge $100 for purchase of certain types of ETF's. So better not purchase them at all. I will stick with my mutual funds and individual stocks. I am not going to pay exorbitant fees. Those days are over.
What's your thought about the Fidelity Target Date Funds like Fidelity Freedom 2045 Fund?
Hey, Jarrad! If I were to sell these free index funds but then immediately move them to one of the paid ones, wouldn’t I not have to be taxed because the money remains in the retirement/non-taxable account?
Basically just reorganizing in that sense.
If it’s in the retirement account, it wouldn’t be taxed, however if in a taxable account regardless of what you do with the money after if you sell you will be taxed.
Yes, that's the case, and one of the reasons mutual funds (in general) were developed was to put them into tax-advantaged accounts such as 401ks or Roths. In those scenarios, it's entirely reasonable to use the zero-based funds....if you're OK with the other issues (ie, the relative lack of diversity compared to the low-fee based ones.)
Ftihx is emerging and fidelity... But more fees (6%)
Is the dividend the same when comparing the 0 fee index funds to let’s say FXAIX?
I'm not a dividend investor so I have no idea
Wow that's definitely not what I was expecting!
Hopefully that’s a good thing?
@@JarradMorrow yes & no... yes because you gave insight & info that i wouldn't have necessarily dug that deep for, no because the funds that suck do for reasons I didn't expect, that don't even make sense. But that's why I follow people like you, Brad and JJ!
this was extremely helpful!!!!! 10 out of 10!!!
Glad it was helpful!
Well, you may be correct. However, I'm a true boglehead lol and I like free stuff like zero expense ratio index funds and cheap chicken and hot dogs at Costco so I'll take a gamble on zero comparably. I do not plan on leaving Fidelity so...
lol ... love the dig on cathy wood. ive never seen someone rise so quickly to fame for doing nothing
I'm so happy she exists so we can use her as the poster child for how someone can be a great talker and marketer, but a horrible investor. Her downfall has broken a lot of uneducated investor's brains. We needed this down market to expose the insanity that's happened over the past 10 years. I don't like seeing people lose money, but this is the only way most will learn how they should be investing their money.
fzrox has zero fee 2200 approx companies but fskax has 4000 approx companies with a very small fee but the returns are greater than fzrox. they introduced these to get the younger crowd in. put my 20 year old in 2 zero fee for roth ira. he will be 401k eligible next year
@@cup2354 math please. 2200 vs 4000 companies %
This was amazing information thank you!!!
Glad it was helpful!
Thank you sir! Very glad of this information!
Glad it was helpful!
Simple example why would you might need to change a platform: when I switched my job one of company’s mandatory terms was that all my investments must be under Fidelity umbrella
Couldn't you just start a new one from the new company and leave the old one alone?
"and my dog, Molly, who actually just tore up her leg and had to get stitches, by hitting that thumbs up button." I didn't even know that dogs had thumbs.
If we use the zero fee funds in a Roth IRA wouldn’t I not get penalized on my gains?
This is the case with any investment within a Roth if you sell for a gain
Awesome shirt. Invest in that.
Jarrad's tie dye company going public in 2035. This innovative company will change the world
Don't believe I've ever seen him in anything but a solid. What might this mean to the market? 😄
I wish my shirts determined what the market did 😂. Unfortunately, my reason for wearing tie dye is a lot simpler- the patterns are way more fun to look at when I'm tripping on mushrooms
I have been investing into these in my Roth IRA. Should I stop investing into them and just invest into their equivalent fee based funds?
It's up to you. Investing into these funds aren't going to destroy your wealth, but if you feel a little differently about them after understanding them more then maybe it would make sense to go ahead and start contributing to equivalent funds that track a 3rd party index (with as low of fees as possible). Only do what makes you feel comfortable and will be able to keep you invested (from a behavioral perspective) no matter what.
Fcntx
The dividend is also paid yearly and not quarterly. I still got the FZROX though because I want to keep it simple sweetie. I agree with you on the FSMAX though.
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Question: We just bought some of Vanguard's Total Market Fund (VTSAX) with an expense ratio of 0.04%, but I didn't know until this video that Fidelity's equivalent (FSKAX) has an expense ratio of 0.015%... With that in mind, would you recommend FSKAX over VTSAX?
Penny pinching at that point. Either is fine don’t overthink it. Both will have tracking errors & will be a few cents off per share & over the long term that’s the equivalent of the fees, it really won’t make a difference at all. Flip a coin honestly.
Sounds like penny pinching. Both are under 5 basis points for expense ratio. Thus they are both super cheap. The performances are nearly the same. Outside of expense ratio, VTSAX pays dividends more frequently than FSKAX (4 times per year vs 2).
Analysis paralysis happens to the best of us.
My husband has SHA and stocks portfolio through Fidelity and get charge $15 per month. Why is it?
I think I might know why based on the same type of comment I've received in the past. There are two types of HSA's offered by Fidelity. The first is a regular HSA that is self directed and there are no fees on the account. The second is something called a "Fidelity Go HSA" where you pay a monthly fee to have them manage it for you.
@@JarradMorrowthank you for your replying , i understand and ok with fee , but i thought $15 / year not per month. That is why i have to find out with expert to ask that is resonabel and fair since me and my husband dont know much about investment. Im an immigration. Thank you again for your help.
Man eye opener. Thank you. 🔥
FTIHX, not FSPSX, is the comparison to FZILX lol. FTIHX has over 5000 holdings and has emerging markets
I knew this guy was knowledgeable when he mentioned unhealthy, corn-fed, gmo rotisserie chicken.
This is good to know though. Thanks for the info.
What would be a good investment app
How much should I invest monthly to have 200 K in 5-6 years?
2600 into S&P500 index
Depends what rate of return you’re assuming. I personally wouldn’t invest money that was needed in that short period of time due to short term volatility in the market
Are these funds okay to hold in a taxable account since I don’t believe they are etfs ?
Technically an ETF would be better served in a taxable account, but if you don't see one that you like then these would be fine
What about for custodial accounts?
Well, since these zero funds opened, the returns are pretty much exactly like the index funds. I don't fear tthem at all.
My IRS is with Fidelity. Now I am scared. Should I be???
Why are you scared?
@@JarradMorrow I meant my IRA. It sounds like Fidelity might fall apart. :(
I wasn’t aware. Where are you hearing this?
I think it worth invest there if you to get your money into the Magellan fund someday.
Why do you prefer the Magellan Fund over a simple S&P 500 or total market index fund?
@@JarradMorrow not always, specially when bear markets come, it tends to go lower than the S&P. But in bull markets it, historically, have done pretty well on beating the S&P.
The exposition to stocks is more concentrated, specially mid cap companies.
Also, it is more expansive than Index fund like IVV or something.
The Golden Age of the fund was under Peter Lynch, I wasn’t even born yet at the time, but the current managers seems to have kept his philosophy.
I currently don’t have any money on it, their drag downs are usually stronger in bears markets, but I’m watching it.
You know I just found your vid’s and I like them. BUT, I’m a Fidelity guy and you know why I like FZROX it’s ZERO exp. Shit on them all you want, but I’m buying and buying.
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Thank you. I really helpful. I like your videos.
I'm so glad!
Great job comparing funds. Really useful information to have. Learned a few things today.
Glad it was helpful!
Really useful info. Thanks!
Great video thanks
Glad you enjoyed it
I still not sure what happen to fidelity a years ago i watch video on you tube many people complain about fidelity
I personally think they're great other than their zero fee funds and actively managed side of things.
@@JarradMorrow I think so but i don't understand I saw some people also leave Fidelity
I got Charles S & Vanguard
What we need to know is how have the zero based funds done in comparison to the fee based funds since their inception.
Not sure off the top of my head but I'd imagine they're pretty close. The zero fee funds haven't been around for very long so the returns could be a little misleading either way
Lol. That Cathy wood quip. 😂🎉
She's a special one 😂
Thank you Jarrad😇🙏🏻
Absolutely!
Helpful thank you
No problem
Good video but you left out the comparison of historical returns between the fee based and zero fee based index funds.
Ftr nothing inherently wrong with GMOs
What I totally dislike about this fund is you cannot purchase limit orders! Also have to wait for purchase to be completed which means you don’t know what price you’re paying if the price moves when you do transaction. Makes me not want to purchase any other Fidelity products! If I’m stuck I will just wait it out. Platform is a fail compared to TD Ameritrade!
That’s cause it’s a mutual fund, you get end of day pricing…limit orders are an irrelevant aspect to long term passive investing. Just buy bulk or DCA
Their is NEVER a free lunch , especially w/o strings..
Very true!
why is it unhealthy because its corn fed?
the dividend of these zero fee fund seems lower too
One big benefit of the zero fee funds is that you don't have to pay the annual management fee, which can add up over the years. If you hold your funds for decades, these fees can be a significant hurdle. FNILX has average annual returns of 21.74%, 10.23%, 14.35%, and 11.92% for 1 year, 3 year, 5 year, and lifetime respectively. Compare that to S&P 500 (SPY) at 26.19%, 9.96%, 15.61%, and 10.02% for 1 year, 3 year, 5 year, and lifetime respectively. For me, it comes down to performance over the long-term. FNILX wins at 3 years and lifetime, but SPY wins at 1 year, and 5 year. FNILX doesn't have a 10 year track record so I could not compare on that metric.
Past performance isn't a good metric to use when building a portfolio you're investing in for the future. Those gains/losses are already locked in so they don't tell us anything about how things will play out going forward.
TBH I thought there's something else to them.
Keep getting subs!
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I'll go along with the Vanguard Group
Same
Well its a no brainer that you get more for your dollars.
Oh snap. Kathy Wood taking heavies.
😂 she asks for it because of how public she is with pumping those funds
1:56 These chickens are perfectly good and safe, regardless of whether they are fed GMO food or not. You should research your ,aims before you blindly make them.
Thanks for sharing your opinion 👍🏻
Well im lost... I didnt understand half of that.
You're comparing funds with drastically different time tables. These zero funds have only been around the last few years. If you look at the volatility index during the covid period, it's obvious as to why a new fund to this period would see a higher turnover ratio as big swings occurred in equities. Additionally why you see low ratings such as the 3 they received from morning star which penalizes for volatility. Also in fairness even small expense ratios have exponential changes on portfolios over long careers. I like your videos but you're leaning click bait on this one.
Thanks for sharing your thoughts and opinions 👍🏻
@@JarradMorrow No response?
There is no statistically significant difference in the investment returns when comparing any of the zero based versus alternative fund.
Certainly no big problems and doubtful you made a case of even a minor problem especially when taking into account the investor drawn to the subject funds.