The Fidelity ZERO Total Market Index Fund (FZROX) is a popular choice for investors seeking broad market exposure with zero expense ratio. This fund aims to replicate the performance of a broad-based market index, offering diversification across a wide range of U.S. companies. Understanding the types of companies FZROX invests in can help investors assess whether it aligns with their investment goals and risk tolerance. Let’s delve into the composition of FZROX’s portfolio and explore the key sectors and holdings that drive its performance.
Key Sectors and Industries Represented in FZROX
FZROX tracks a market-weighted index, meaning its holdings reflect the overall composition of the U.S. stock market. Therefore, it invests in a wide array of sectors. The weighting of each sector will vary depending on market conditions.
- Technology: Companies involved in software, hardware, and IT services.
- Financials: Banks, insurance companies, and investment firms.
- Healthcare: Pharmaceutical companies, healthcare providers, and medical device manufacturers.
- Consumer Discretionary: Retailers, restaurants, and entertainment companies.
- Consumer Staples: Companies producing essential goods like food and beverages.
- Industrials: Manufacturers of machinery, aerospace, and defense companies.
- Communication Services: Telecommunication companies and media companies.
- Energy: Oil and gas companies.
- Utilities: Companies providing electricity, gas, and water.
- Real Estate: Real estate investment trusts (REITs) and real estate developers.
- Materials: Companies involved in the production of raw materials.
Top Holdings of FZROX
While FZROX invests in thousands of companies, a significant portion of its assets is typically concentrated in its top holdings. These are generally the largest and most influential companies in the U.S. market. Because FZROX tracks a total market index, its top holdings will generally mirror those of other broad market index funds.
Here’s an example of what the top holdings might look like (note: these values fluctuate and should be checked with current fund data):
- Apple Inc. (AAPL)
- Microsoft Corp. (MSFT)
- Amazon.com Inc. (AMZN)
- Alphabet Inc. (GOOGL) (GOOG)
- Berkshire Hathaway Inc. (BRK.B)
- UnitedHealth Group Inc. (UNH)
- JPMorgan Chase & Co. (JPM)
- Exxon Mobil Corp. (XOM)
- Johnson & Johnson (JNJ)
- Meta Platforms Inc. (META)
FZROX vs. Other Index Funds: A Comparison
While FZROX aims for broad market coverage, it’s helpful to compare it to other similar index funds. The primary difference often lies in the expense ratio, which is zero for FZROX, a major advantage. Other funds may have slightly different tracking indexes and therefore, slightly different holdings.
| Feature | FZROX (Fidelity ZERO Total Market Index Fund) | VTI (Vanguard Total Stock Market ETF) | ITOT (iShares Core Total U.S. Stock Market ETF) |
|---|---|---|---|
| Expense Ratio | 0.00% | 0.03% | 0.03% |
| Tracking Index | Fidelity US Total Investable Market Index | CRSP US Total Market Index | S&P Total Market Index |
| Number of Holdings (Approximate) | ~8,000 | ~4,000 | ~3,600 |
| Top 10 Holdings Concentration (Approximate) | ~25% | ~25% | ~25% |
FAQ About FZROX Investments
Q: Does FZROX invest in international companies?
A: No, FZROX primarily invests in U.S.-based companies to track the performance of the U.S. total market.
Q: How often does FZROX rebalance its portfolio?
A: FZROX rebalances its portfolio periodically to maintain its alignment with the underlying index. The frequency of rebalancing is determined by Fidelity.
Q: Is FZROX a good investment for beginners?
A: FZROX can be a good option for beginners due to its broad diversification and zero expense ratio. However, investors should always consider their own risk tolerance and investment goals before investing.
Q: What are the risks associated with investing in FZROX?
A: The main risks are market risk (the risk that the overall market will decline) and concentration risk (the risk that a few large holdings could disproportionately impact the fund’s performance). While diversified, it’s still subject to market fluctuations.
