VTSAX vs FZROX, who is the best?

VTSAX is one of my favorite funds. It is simple, easy, and it has low expenses. This index fund tracks the Total Stock Market, and it is efficient. As everyone knows, new products come out all the time. Fidelity released a couple of Fidelity Zero Funds. One in particular is FZROX. Today, we will talk about what is better VTSAX vs FZROX. Let’s ride.


The main thing about these two mutual funds is price and performance. These are no load passively managed index funds that are held by Vanguard (VTSAX) and Fidelity (FZROX). They are total market index funds that have low cost, and gives us a broad range of ownership of the total stock market. 


VTSAX is an index fund that tracks the total stock market. It holds around 4000 different companies. It is very tax efficient and it is the best of the best at Vanguard. 


FZROX is a newer fund created by Fidelity. It has a $0 minimum and 0% expense ratio. In the fee wars that the companies have been having created another type of fund. One that has zero expense ratios and therefore zero fees. It is something that may attract the eye, but we shall see how they compare.

Minimum investments.

When we are searching for index funds, we want to know how much does it cost to get started investing. Money talks and the more money you have to fork over the harder it is to get your money working for you. ETFs have this a bit easier having a lower price point to get started. 

VTSAX’s minimum is $3,000 to get started. After that, it is just $1. This one is a bit pricier to get started in. First you need to be able to save up $3,000, and secondly while you are saving up, your money is not working for you. 

FZROX’s minimum is $0 to get started. That is truly a great advantage to have. It does not cost much money to get started, plus anyone can start now to get their money working for them. That makes it easy for the average joe to get started investing without that much money. 

Winner: FZROX

Expense Ratios:

Mutual funds, Index Funds, and ETFs ( Exchange traded funds) all have some sort of expense related to them operating. Therefore expense ratios are added on to the fund.

Expense ratios are a type of management fee that is added to a fund. They fund the operations of the mutual fund. The expenses are taken out of the fund, and therefore the owner does not see it as a fee. 

VTSAX has one of the lowest expense ratios on the market. It is sitting at 0.04%. At $10,000, it will cost just $4 to operate the fun. That is not bad at all. This expense beats more than 85% of the actively managed mutual funds on the market today.

The expense of being so much cheaper is the reason Vanguard is able to keep their clients and their businesses doing so well. It is low-cost. 

FZROX is the new kid on the block with an expense ratio of 0%. There is no expense ratio, which means at $10,000 there is no fee that comes out of your pocket to own this index fund. That is an amazing thing. Vanguard beats almost everyone, but Fidelity came out strong with a 0% expense ratio. 

Winner: FZROX

Diversification of the funds:


Diversification of the funds basically means that one fund is more diverse than another fund.

It is like the old saying “Don't put all your eggs in one basket.”

If you have an S&P 500 index fund vs a total stock market fund, the total stock market fund would win due to having more companies that are within the fund. This effectively has an impact on the diversification of your portfolio. 

VTSAX tracks the total stock market index. It has about 3500 companies in net assets giving it a very diverse outlook on the American stock market. If a new company enters then you will not have to worry about it rising to the top or even falling off. 

FZROX tracks about 2500 companies. It is more into the large cap companies. Given that it only goes with 2500 companies makes it less diversified than VTSAX, but it is still pretty diverse allocation since it has 2500 companies. 

Since VTSAX has about 1000 more companies inside the fund, it is a more diversified portfolio of companies. 

Winner: VTSAX


Dividends are the cash that companies give back to their stock owners. Usually dividends are distributed quarterly, and you can have those reinvested in order to buy more shares of stock. This is like that little reward for being a faithful owner. 

Index funds give out dividends as well. Depending on the fund depends on when they give those out and if it has a high yield. I particularly like the ones that send them out quarterly. It is because they can be reinvested and start to work for me sooner rather than later. 

VTSAX sends out a quarterly dividend. Their dividend comes out in March, June, September, and December. Four times a year you can celebrate that you are getting a little bit of a pay day. 

FZROX sends out their dividends annually. The dividend comes out once a year in December. It is just a way they do things. 

I would rather have my money working for me as soon as possible so it is good to have the dividends four times a year. So with that, VTSAX will be the winner in my book. 

Winner: VTSAX

Tax Efficiency

Tax efficiency

Tax efficiency is a big one relating to mutual funds like VTSAX and FZROX. You can save money on low costs, but if there are tons of taxes coming from it then where would the savings be. 

Mutual Funds often have many trades that can result in capital gains. They may have short-term or long-term gains. Long term gains are any gains that result from a security (stock) held for more than a year. Short-term would be any gains held less than a year. 

Short-term is taxed at your normal tax rate, and Long-term is taxed at a rate depending on your income. The highest would be 20%. The lowest 0%. 

VTSAX does a great job with keeping taxes to a minimum. They do not pass on any gains to the investor at all. Making this fund one of the most tax efficient funds on the market. That is great news for the investor. 

FZROX does have some short-term and maybe some long-term capital gains. They will pass this on to the investor. This will increase the expense of the fund, and cost the investor a bit of money due to taxes. 

Winner: VTSAX

ETF Versions for VTSAX vs FZROX

One thing many people are looking for are ETFs. An Exchange Traded Fund (ETF) is a fund that is traded on the stock exchange like a stock. 

VTSAX and FZROX are both index funds, which are mutual funds. It can be hard to own these if you do not have an account with Vanguard or Fidelity. When determining, which fund (VTSAX vs FZROX) is best you may look to see if you can buy the ETF shares.

Not everyone in the world has access to American mutual funds. ETFs are much easier to buy through different brokerages especially if you are not an American citizen, but want to purchase these funds. We like ETFs because they just give us more options.

ETFs give an easier option to own index funds. So let's see if these two index funds have an ETF equivalent. 

VTSAX has an ETF equivalent. It is VTI. VTI has an expense ratio of 0.03%, which is 0.01% lower than VTSAX. That is great. Cheaper is better. 

FZROX does not have an ETF. Therefore, it will be hard to incorporate this into your portfolio if you did not already have an account with Fidelity. 

If you are into ETF trading, VTI will be your best bet, since FZROX does not have an ETF.

Winner: VTSAX

Vanguard vs Fidelity

Vanguard vs Fidelity

The last thing I want to talk about are the two companies. There is Vanguard and Fidelity. You cannot go wrong with being in with these brokerage companies. They are the top of the top. 

The only thing I see a difference in is who owns the company. Fidelity is owned by the Johnson family. The family has a venture company called F-Prime, which will go after pre-IPO companies before their mutual funds can. This allows the family instead of the fund holders to increase their wealth. This is quite interesting to speculate why isn't Fidelity all about their investors. Reuters did a report on this called “How the Owners of Fidelity Get Richer.” 

Vanguard on the other hand is owned by the investors. The people that invest their money into Vanguard own the company. The company is not obligated to make any decisions that hurt their investors. 

This one is a tie because you can go to whichever company you choose. It is all up to you.

Some Last Thoughts:


So I just broke down VTSAX vs FZROX. These are two funds that people will be talking about for years to come. Which one is better is all up to you. I put out some information to help you decide. Personally, I like VTSAX. 

It may be an ongoing debate. Who is best? VTSAX vs FZROX

What would you choose?

” Spend less than you make, stay out of debt, and invest the rest”

14 thoughts on “VTSAX vs FZROX, who is the best?”

  1. Happy Birthday Steve!!
    You are really a kind person with amazing influence that you even wrap your knowledge as gifts and send them to your readers on your own birthday:)

    This is a terrific comparison with a full breakdown, but I searched for FZROX in ETF equivalent and didn’t find anything…

    Also I just heard from my colleague that foreigners are subjected to US withholding tax rate of 30% on dividends paid out by U.S. companies. Typically U.S. brokers will pay those taxes to government before we get our dividends.

    • Thank you for the Birthday wishes. You are so kind Tommy.

      I do not think there is an ETF equivalent for FZROX. It is just an index fund. If I did ETFs, it would be VTI.

      There is a 30% withholding tax on certain foreigners from countries that do not have a tax treaty with the U.S. Taiwan is one of those. Now, they will pre take it out of the dividends. Depending on the ETF that you may get or the fund depends on the dividends. With VTI, the dividend is around 1.80%, but the fund is growing like 8-14% on average since its inception. So, a 30% tax on a 1.80% dividend really does not do to much damage to the growth of the fund.

      Ex: VTI dividend this quarter is $0.78. So at 30%, it will take $0.234 from the divdend. It is all about what you value. I value the growth of the fund, so it will keep growing and growing. The dividend helps it to buy more shares, but the fund keeps growing.

      I hope that helps.

  2. Wow you are right Steve, we buy-and-holder do not have to worry too much about dividends being eaten out a little bit haha, it’s only a matter of how we feel.
    Just my colleague said there seems to be a way to prevent it, so I did some research on it but didn’t really find out much. I’m with you and think that 30% on ETF’s dividends doesn’t really sting, but I can understand why he cares because he buys stocks…

  3. A nice comparison between VTSAX and FZROZ, very thorough! You hit the nail on the head with who owns these companies. While Fidelity has zero fees right now, it doesn’t mean they always will. Overall, I agree that VTSAX is better. Perhaps I’m biased, but it’s what I choose to invest in. Great post, appreciate the information!

    • I was going through and someone’s tweet really sparked my interest to look into who is the best. I totally agree that I think VTSAX is the best, but often times people choose price over anything even though taxes can sting a bit. I may be a bit biased as well.

      Thank you.

      • This can be said for VTSAX as well. Dividends for different stocks get delivered throughout the year. At the end of the year, FZROX will need to have some cash to pay their dividend or they will need to sell some of the shares.

        • You are misunderstanding how Fidelity pays dividends. They are “paid out” in December but the share price takes a hit by the equivalent price. The dividend reinvestment throughout the year is incorporated into the price. See the update in this article.

          • Thank you Steve for your comment.

            I am not misunderstanding how Fidelity pays dividends. That is how dividends work. When one company pays a dividend its share prices take a hit by the equivalent price. I have an article about dividends. https://thefrugalexpat.com/what-is-a-dividend/. As I mentioned in this article VTSAX vs FZROX, “I would rather have my money working for me as soon as possible so it is good to have the dividends four times a year.”

            I believe that time in the market is much better than timing the market. For instance, a quarterly dividend for VTI on March 31st, 2020 had a base price of $130.45. So my dividend could buy cheaper shares. In December of 2020, the base price was $194.24 giving me fewer shares with the dividend.

            Which one would you rather choose?

  4. One correction to your article. I’m not sure about vanguard, but Fidelity is a private company, they do not have shareholders or trade on the market.


    • Carl, you are absolutely right. I had to look it just to make sure. I read that Vanguard was only one without shareholders, and it was owned by the people. Fidelity is owned by the FMR LLC. Thank you for opening my eyes to this.


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