VTI vs FZROX: Should You Use Fidelity's Zero-Fee Fund in 2025?

Fidelity uses FZROX as a loss leader to attract investors who will use other Fidelity services. The fund tracks a proprietary index (Fidelity U.S. Total Investable Market Index) rather than a licensed index, saving licensing fees. It works-FZROX has attracted billions in assets from cost-conscious investors. The trade-off is brokerage lock-in and a slightly different index.

VTI tracks the CRSP US Total Market Index (~4,000 stocks). FZROX tracks Fidelity's proprietary index (~2,500 stocks). Both cover essentially the same large and mid-cap stocks. FZROX holds fewer small-caps, which historically have higher returns but also higher volatility. In practice, performance differences have been minimal-within 0.1% annually.

FZROX can only be held at Fidelity. If you ever want to move to Vanguard, Schwab, or another broker, you must sell FZROX (triggering capital gains in taxable accounts) and rebuy something else. VTI as an ETF transfers freely between brokerages. For taxable accounts with long holding periods, VTI's portability is a genuine advantage.

If you're all-in on Fidelity for the long term: FZROX is genuinely free and performs identically. If you might switch brokerages someday: VTI offers flexibility worth the 0.03% fee. If you're in a 401(k) with limited options: use whatever total market fund is available. Don't overthink it-both are excellent, and the difference between 0% and 0.03% fees is $30 per year on $100,000.