FNILX vs FXAIX: Fidelity ZERO vs 500 Index — Which Is Better? (2026)
FNILX charges literally nothing. FXAIX charges almost nothing. Both are Fidelity large-cap index funds with nearly identical returns. This comparison breaks down why they're different, which one actually wins, and who should choose which.
By Dan Mahler · Published August 27, 2026
💡 Bottom Line Up Front
For most Fidelity investors, FXAIX is the better choice despite costing slightly more. It tracks the actual S&P 500, has a longer track record, $833B in assets, and has delivered slightly better returns (15.93% vs 15.49% over the past year). The 0.015% expense ratio costs just $15/year on $100,000 — you won't notice it. FNILX makes sense if you're philosophically committed to zero fees or starting with a very small account. Either way, you can't go wrong — the real difference is negligible.
FNILX vs FXAIX: Quick Comparison
| Metric | FNILX | FXAIX |
|---|---|---|
| Full Name | Fidelity ZERO Large Cap Index | Fidelity 500 Index Fund |
| Index Tracked | Fidelity U.S. Large Cap Index | S&P 500 |
| Expense Ratio | 0.00% | 0.015% |
| Minimum Investment | $0 (both) | |
| 1-Year Return | 15.49% | 15.93% |
| 3-Year Annualized | 23.10% | 22.94% |
| 5-Year Annualized | 13.54% | 13.81% |
| 10-Year Annualized | N/A (launched 2018) | 15.05% |
| Volatility (Std Dev) | 12.94% | 12.84% |
| Dividend Yield | 0.92% | 1.06% |
| Total Assets | $18.7 billion | $833.1 billion |
| Category | Large Blend (both) | |
Overview: The Zero-Fee Experiment
In August 2018, Fidelity shocked the investment industry by launching the first mutual funds with a 0.00% expense ratio — no management fee at all. FNILX (Fidelity ZERO Large Cap Index Fund) was one of these groundbreaking offerings. It was designed to compete directly with Fidelity's own FXAIX and Vanguard's VFIAX by eliminating fees entirely.
How does Fidelity afford to run a fund for free? Simple: FNILX is a loss leader. By offering zero-fee funds, Fidelity attracts customers to its brokerage platform, where they use cash management accounts, trading services, and higher-fee products. The fund itself may lose money for Fidelity, but the customer relationship is worth far more.
The catch — and it's a minor one — is that FNILX doesn't track the S&P 500. To avoid licensing fees from S&P Dow Jones Indices (which would make a 0.00% expense ratio impossible), Fidelity created its own proprietary index: the Fidelity U.S. Large Cap Index. It's designed to closely mirror the S&P 500, but it's not identical.
Performance: FXAIX Has the Edge
Despite charging a fee (however tiny), FXAIX has actually delivered better returns than FNILX over most time periods. Here's the head-to-head:
| Time Period | FNILX | FXAIX | Winner |
|---|---|---|---|
| 1-Year Return | 15.49% | 15.93% | FXAIX ✅ |
| 3-Year Annualized | 23.10% | 22.94% | FNILX ✅ |
| 5-Year Annualized | 13.54% | 13.81% | FXAIX ✅ |
| 10-Year Annualized | N/A | 15.05% | FXAIX ✅ |
The 1-year gap (0.44%) is significant — FXAIX returned 15.93% vs FNILX's 15.49%. On a $100,000 portfolio, that's a $440 difference in a single year. Over 3 years, FNILX narrowly wins (23.10% vs 22.94%), but FXAIX takes back the lead over 5 years.
Why does a fund with fees outperform a free fund? It comes down to the index. The S&P 500 is curated by a committee that selects companies based on market cap, liquidity, financial viability, and sector balance. This committee-driven approach has historically acted as a quality filter — companies must be profitable and meet specific criteria to be included. FNILX's proprietary index uses a purely rules-based methodology that doesn't have this human judgment layer.
Expense Ratios: The Headline vs the Reality
FNILX: 0.00%. FXAIX: 0.015%. On paper, FNILX wins — zero is less than anything. But let's put 0.015% in context:
| Portfolio Size | FNILX Annual Fee | FXAIX Annual Fee | Difference |
|---|---|---|---|
| $10,000 | $0.00 | $1.50 | $1.50/yr |
| $100,000 | $0.00 | $15.00 | $15.00/yr |
| $500,000 | $0.00 | $75.00 | $75.00/yr |
| $1,000,000 | $0.00 | $150.00 | $150.00/yr |
At any realistic portfolio size, the fee difference is negligible. You're paying $15/year on $100K — the cost of a single lunch. The 0.44% return advantage of FXAIX over the past year dwarfs the 0.015% expense ratio difference by a factor of 29. Returns matter more than fees when fees are this low.
Index Methodology: Why It Matters
This is the most important difference between these two funds, and it's often overlooked:
FXAIX → S&P 500
- • Committee-selected: A group at S&P Dow Jones Indices decides which companies make the cut
- • Profitability requirement: Companies must show positive earnings
- • Exactly 500 stocks at all times
- • Global benchmark: The most followed equity index in the world
- • Licensed index: Fidelity pays S&P for the right to track it
FNILX → Fidelity U.S. Large Cap Index
- • Rules-based: Mechanical selection — no committee discretion
- • No profitability screen: Includes unprofitable large-caps
- • ~500 stocks but not always exactly 500
- • Proprietary: Created by Fidelity to avoid S&P licensing fees
- • No licensing cost: Enables the 0.00% expense ratio
In practice, both funds hold very similar portfolios — the overlap is roughly 80-90%. The top holdings (Apple, Microsoft, NVIDIA, Amazon, etc.) are the same. The differences appear at the margins: FNILX may include companies that the S&P committee would exclude, or weight them slightly differently. These small differences explain the performance gap.
Risk and Volatility
Both funds have nearly identical risk profiles — as you'd expect from two funds holding essentially the same large-cap U.S. stocks:
- • FNILX volatility: 12.94% standard deviation
- • FXAIX volatility: 12.84% standard deviation
The 0.10% volatility difference is statistically insignificant. Both will rise and fall with the U.S. large-cap market. In 2022, both dropped roughly 20%. In 2023-2024, both surged with the AI-driven tech rally. You won't notice a difference in how they behave during market stress.
One subtle risk difference: FNILX's proprietary index could theoretically be changed by Fidelity at any time. The S&P 500's methodology is publicly documented and governed by an independent committee. This isn't a major concern — Fidelity has no incentive to make disruptive changes — but it's worth noting for purists.
Portability: The Hidden Catch
Here's something most comparisons miss: FNILX can only be held at Fidelity. The ZERO funds are proprietary — you can't transfer them to Schwab, Vanguard, or any other brokerage. If you ever leave Fidelity, you'd have to sell your FNILX shares (triggering capital gains taxes in a taxable account).
FXAIX, by contrast, can typically be held at other brokerages (though some may charge transaction fees). This portability makes FXAIX more flexible for long-term planning.
For most investors who are committed to Fidelity, this doesn't matter. But if there's any chance you'll switch brokerages in the future, FXAIX gives you an exit path that FNILX doesn't.
FNILX vs FXAIX: Who Should Choose Which?
Choose FNILX if you…
- ✅ Want the lowest possible expense ratio (literally $0)
- ✅ Are starting with a small account and every dollar matters
- ✅ Plan to stay at Fidelity long-term
- ✅ Don't care whether you track the exact S&P 500
- ✅ Value the psychological appeal of zero fees
Choose FXAIX if you… ⭐
- ✅ Want to track the actual S&P 500
- ✅ Prioritize returns over fee optics (FXAIX has outperformed)
- ✅ May switch brokerages someday
- ✅ Want a fund with a longer track record and $833B in assets
- ✅ Use the S&P 500 as your benchmark and want to match it precisely
Our take: FXAIX is the better fund for most people. The 0.015% fee is meaningless in practice, and FXAIX has consistently delivered better returns thanks to the S&P 500's committee-driven quality filter. The portability advantage is a bonus. That said, FNILX is an excellent fund — if you're already in it, there's no urgent reason to switch.
Frequently Asked Questions
What is the difference between FNILX and FXAIX?
FNILX (Fidelity ZERO Large Cap Index) tracks a proprietary Fidelity index with a 0.00% expense ratio. FXAIX (Fidelity 500 Index) tracks the S&P 500 with a 0.015% expense ratio. Both hold large-cap U.S. stocks, but FXAIX tracks the well-known S&P 500 while FNILX uses Fidelity's own index that closely mirrors it.
Is FNILX really free?
Yes, FNILX has a 0.00% expense ratio — Fidelity charges no management fee. This is possible because Fidelity uses it as a loss leader to attract customers to its brokerage, where it earns revenue from other products and services. There are no hidden fees.
Why does FXAIX slightly outperform FNILX?
Despite higher fees (0.015% vs 0.00%), FXAIX has returned 15.93% vs FNILX's 15.49% over the past year. The difference is index methodology — the S&P 500 is committee-selected with a profitability requirement that acts as a quality filter. FNILX's proprietary index uses a purely rules-based approach without this human judgment layer.
Can I hold both FNILX and FXAIX?
You can, but there's little reason to. Both hold very similar large-cap U.S. stocks with roughly 80-90% overlap. Holding both gives you near-identical exposure. Pick one based on whether you value zero fees (FNILX) or precise S&P 500 tracking (FXAIX).
Can I transfer FNILX to another brokerage?
No. FNILX (and all Fidelity ZERO funds) can only be held at Fidelity. If you leave Fidelity, you'd need to sell your shares — triggering capital gains taxes in a taxable account. FXAIX can typically be held at other brokerages, giving you more flexibility.
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