The Fidelity 500 Index Fund (FXAIX) gained 0.65%, reaching a net asset value of $271.20 as the S&P 500 closed at a record level. The fund’s ultra-low 0.015% expense ratio is also drawing attention because it gives FXAIX a significant cost advantage over the SPDR S&P 500 ETF Trust (SPY).
FXAIX Keeps Costs Low
FXAIX’s expense ratio is substantially below SPY’s listed 0.0945% fee. On a hypothetical $100,000 investment, that translates to about $15 in annual expenses for FXAIX, compared with approximately $94.50 for SPY. Vanguard’s VOO and iShares’ IVV have listed expense ratios of 0.03%, putting them between the two funds.
The difference can become more meaningful over longer periods when fees compound. The source’s hypothetical calculation, assuming a steady 7% annual return before fees and stable expense ratios, showed a $100,000 investment in FXAIX ending about $1,455 higher than an equivalent investment in SPY after 10 years. However, actual results can differ because returns, fees, taxes and other costs can change.
Performance Closely Tracks the S&P 500
Despite their different structures, FXAIX has continued to closely follow the S&P 500. As of June 30, the fund’s one-year annualized return was 22.31%, compared with 22.32% for its benchmark. Its three-year annualized return was 20.60%, just one basis point below the benchmark.
One important difference is how investors trade the products. FXAIX is a mutual fund priced once daily after the market closes, while SPY is an exchange-traded fund that trades throughout the session. That means investors choosing between them must consider not only expenses and index tracking but also trading flexibility and their investment strategy.
Concentration Remains a Key Risk
FXAIX tracks the S&P 500, meaning its performance remains heavily influenced by the largest companies in the index. As of June 30, its 10 largest holdings represented 36.39% of total assets. Major technology companies such as Nvidia, Apple, Alphabet, Microsoft and Amazon were among its largest exposures.
The recent gain highlights FXAIX’s close relationship with the broader U.S. stock market, while its exceptionally low fee remains one of its most notable features. Still, investors should remember that low expenses do not eliminate market risk, and past performance does not guarantee future results.
Source : ts2
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