Index funds are one of the easiest yet most effective ways for nearly anyone to invest in the stock market and build wealth over time. In fact, Warren Buffett, one of the best investors of all time, wrote in his 1993 shareholder letter that “by periodically investing in an index fund, the know-nothing investor can actually outperform most investment professionals.”1
Fidelity offers some of the best index funds available today, with lower costs than many competitors including Vanguard. The differences between Fidelity’s index fund lineup and other brokerages often come down to expense ratios, fund selection, and account features. When investors choose where to buy index funds, Fidelity provides an excellent option with rock-bottom fees and wide market coverage.
Index funds are investment vehicles that provide exposure to hundreds or even thousands of different companies all within one purchase. The benefit here is that index funds are passively managed, which means they offer low-cost investing, are easy to buy, and deliver great diversification within a portfolio. With the right funds covered throughout our review, these investments have proven historically to provide strong returns over time.
We are also going to cover an example portfolio later that shows how these funds work together to create a balanced, long-term investment strategy. Understanding the differences between these Fidelity offerings helps investors make better decisions with all the facts in front of them. Let’s start with the foundation of nearly any portfolio.
» Ready to invest for retirement? Check out our review on the top IRA accounts
SoFi Invest IRA | 
Robinhood IRA | 
Fidelity Investments IRA |
Fees $0 per trade | Fees $0 per trade ($0.50-$0.75 per futures contract) | Fees $0 per online equity trade ($0.65 per options contract) |
Account Minimum $0 | Account Minimum $0 | Account Minimum $0 |
Promotion Earn a 1% match on rollovers and contributions to a SoFi IRA. | Promotion Unlimited 1% IRA match after opening a Robinhood IRA and make eligible contributions, transfers, and rollovers. Terms apply. | Promotion None no promotion available at this time |
on SoFi's website | on Robinhood's website | on Fidelity's website |
Fidelity Total Market Index Fund (FSKAX)
The first thing investors need to understand about all the index funds we are reviewing is that they are all mutual funds. There’s an entire article covering index funds vs mutual funds and ETFs, as well as the differences in their tax efficiency for those looking for more details on these topics.
The biggest takeaway is that when investors buy mutual funds, they’re slightly less liquid than ETFs or stocks because the trades only go through at the end of the market day, and they typically have 5 letters in their ticker symbol like FSKAX. This type of fund structure offers specific benefits for long-term investors, particularly when held in retirement accounts like IRAs.
When you invest in the Fidelity Total Market Index Fund, you are getting exposure to nearly all publicly traded U.S. companies. In the click of a button, you can own over 3,800 different holdings that range from large, mid, to small cap sized companies diversified across value, blend, and growth style characteristics.
The data shows that the largest sector exposure is technology at close to 30%, followed by financial services, healthcare, and consumer cyclical. Something else important to know about this fund is that it’s market cap weighted, which means the companies inside the fund are given weight based on their size.
For instance, because Apple, Microsoft, and Nvidia are among the largest companies in the U.S. and even the world, they each have a significant amount of weight toward the fund. Looking at the top 10 companies, most investors will recognize these names, and if combined together, these 10 companies alone make up nearly 30% of the entire fund.
Even if that sounds risky, the biggest benefit of all with index funds is that as markets rotate over time, the investments in the fund also rotate, which reduces the risk on investments while still offering strong growth over time. The leading companies historically have changed significantly and many of the top ones today may very well be different in the future.
The S&P 500 index, which contains strictly 500 of the largest U.S. companies, shows that the average annualized return from 1928 to 2024 was just over 10%.2 Now, the S&P 500 index isn’t the same as FSKAX with small, mid, and large cap exposure, but if comparing an S&P 500 index to a total stock market index fund, there is currently an 88% overlap between the two. The main difference is that investors access more exposure to small and mid sized U.S. companies with the total market index.
The impact of averaging 10% per year over time can lead to significant gains. Let’s say someone invests $7,000 per year, which is roughly $583 per month. Averaging 10% for 30 years means they would have over a million dollar portfolio. If this investment plan were executed in a Roth IRA, by the time retirement arrives, everything in the account could be completely tax free.
» Analyze your investments: Try StockRover’s 2-week free trial today
Over the past 10 years, FSKAX has averaged an 11.61% annual return.3 Not just is that strong performance, but this index fund is among the cheapest investments available. Its current expense ratio is 0.015%, which means every $10,000 invested costs just $1.50 in fees per year.
This expense is automatically taken out of the investment over time – it’s not something investors pay separately. To understand how good this cost structure is, from the example earlier of investing for 30 years, the total amount in fees over that time would be just over $2,000. If someone invested in the average actively managed fund with a 0.68% expense ratio, their portfolio would be just under $1 million because they would have accumulated a total cost of over $135,000 in fees.4 The difference between these two scenarios is substantial.
Vanguard offers similar total market index funds, but Fidelity’s FSKAX often beats Vanguard’s equivalent on expense ratio. When investors research and compare these options, the lower cost can make a meaningful difference over decades of investing.
» Stay ahead of your finances: Join our newsletters today
Fidelity Large Cap Growth Index Fund (FSPGX)
This fund is designed to track the Russell 1000 Growth Index, which is a market cap weighted index designed to measure the performance of the large cap growth segment of the U.S. equity market. Starting March 24th, 2025, no more than 22.5% of the weight may be allocated to a single company, and the sum of all companies that are above 4.5% weight combined cannot be more than 45% of the entire index.5
All of these indexes have strict guidelines on what companies can be included in their funds. For this large cap growth fund, the data shows that Apple, Microsoft, and Nvidia are also the largest holdings just like the total market index fund, but here they have even more weight to each – roughly 12%, 10%, and 9% respectively.
The top ten holdings alone make up nearly 57% of the entire fund with a total of 399 holdings. The main sectors in the fund are technology at roughly 48%, consumer cyclical close to 15%, and communication services at 13%.
Because tech stocks have performed well lately, over the past 5 years, this fund has averaged a 17.2% annual return, and since it was publicly created in 2016, it has averaged a 16.78% annual return. All while costing investors a small 0.035% expense ratio, which means every $10,000 invested costs $3.50 per year in fees.
The returns may seem great, but no one knows the future, and these past performance numbers offer no guarantee of future results. Investors will want to think about how they personally want to allocate based on their own position. There are fewer holdings and more concentrated risk here than a total stock market index fund. Since 1972, the large cap growth index has computed relatively similar results as the total stock market index.
Academic research has consistently shown that diversification remains a critical strategy for long-term investors. Studies analyzing portfolio performance across multiple crisis periods demonstrate that well-diversified portfolios help reduce overall portfolio volatility and provide more stable returns over time.6 Index funds provide great diversification, and the 4 funds in this review have all performed well over time in different market conditions, which is why they are among the best overall choices for long-term investors.
When comparing the 500 index options available from various fund companies, Fidelity’s large cap growth offering provides a focused approach to the growth segment of the market. This focus can beat broader market indexes during periods when growth stocks outperform value stocks.
» Move your 401(k)s: Use Capitalize to consolidate old accounts
Fidelity Small Cap Index Fund (FSSNX)
This fund is designed to track the Russell 2000 Index, which means it seeks to provide investment results that correspond to the total return of stocks of small cap U.S. companies. Many of these holdings are companies that most investors haven’t heard of, where the top ten make up roughly 4% of the entire fund, and the fund has 1,965 holdings total.
The main sectors that make up this fund include financial services at 18%, followed by healthcare, industrials, and technology. This fund is positioned between growth and value styles, with higher volatility, and small cap size characteristics.
Even though one of the main benefits of small cap stock exposure is that the companies are known to have more potential for growth relative to large cap companies, over the past 10 years, this fund has actually underperformed by quite a bit. Over the past 10 years, it has averaged a 6.47% annual return with a 0.025% expense ratio, so every $10,000 invested costs $2.50 per year.
Research analyzing market cycles shows that small cap stocks are one of the better returning assets after bear markets. Historical data demonstrates that while small cap stocks tend to be among the lowest performers as markets fall, they significantly outperform when markets recover.7 This doesn’t mean it’s a better choice necessarily, but it does suggest that small cap exposure as a portion of a portfolio may be worth considering for those seeking to diversify beyond large cap stocks.
Another interesting point about small cap stocks is that research shows the returns from the bottom of bear markets since 1926 indicate their post-bear-market performance tends to beat large cap stocks on average. In fact, one, three, or five years after a bear market bottom, small cap stocks have historically outperformed.
Studies show that a portfolio with small cap exposure doesn’t just improve diversification, but can potentially beat pure large cap portfolios over the long run when investors choose to include this asset class. The portfolio example we are covering later allows for small cap exposure to be balanced with mid cap stocks.
When investors review their options and consult various sources on portfolio construction, adding small cap value exposure often appears as a reliable strategy for long-term wealth building. This approach helps investors access different parts of the market that provide unique return characteristics.
» Monitor your retirement progress: Get started with Boldin’s financial planning tools
Fidelity Total International Index Fund (FTIHX)
The principal of this fund is to track the MSCI All Country World Index excluding the USA investable market, where it seeks to provide investment results that correspond to the total return of foreign developed and emerging stock markets. The fund has 5,070 holdings with the top one being Taiwan Semiconductors and many more thereafter with very low weights to the fund.
The top sectors include financial services at 22%, followed by industrials, technology, and consumer cyclical. The top countries consist of Japan at 15%, then the UK, China, Canada, and many countries from around the world thereafter.
If we look at the past 5 year performance, we can see this fund has averaged a 10.27% annual return, and since it was publicly created in 2016, it has averaged 6.68% per year, all while having a 0.06% expense ratio.
Accessing international index exposure may be worth considering, but keeping the amount lower compared to U.S. stocks makes sense for most investors. In fact, one reason is that many of the top U.S. stocks also generate significant revenue in other countries. For example, Nike generates 57% of its revenue from outside North America.
There are many more examples similar to that, but even though U.S. stocks have provided stronger results over time, there have still been periods where international markets have outperformed. For investors looking to increase exposure and reduce volatility, a small portion allocated to international index funds may be something worth considering.
International index funds provide access to developed and emerging markets that offer different growth prospects than U.S. markets. When investors plan their long-term strategy, including some international exposure can help reduce the risk of being too focused on a single country or region.
» Advanced research and analysis tools: Try Seeking Alpha Premium free today
Portfolio Example
For this analysis, the portfolio example consists of 55% total stock market (FSKAX), 25% large cap growth (FSPGX), 15% small cap (FSSNX), and 5% total international (FTIHX).
With all of these investments combined, the data shows the largest sector exposure is technology at 31%, followed by financial services, consumer cyclical, and healthcare – all very close to the S&P 500 benchmark. Another difference is the 5% allocation toward international stocks compared to the S&P 500 index.
Looking even further into the details, the majority of this 4 Fidelity index fund portfolio has the largest weight to large cap stocks, and then the mid cap and small cap allocations are roughly equal.
This portfolio provides broad diversification while maintaining a focus on growth through the large cap growth allocation and total market exposure. The small cap position adds potential for outperformance during certain market cycles, while the international allocation provides geographic diversification across different countries and regions.
No one knows what the future holds, but historical data shows that well-diversified portfolios like this one have delivered strong long-term results. Investors should be aware that this portfolio is expected to be slightly more volatile than holding just the S&P 500 index alone.
For those seeking more details on the topic of simple portfolio strategies, there’s an article on the Warren Buffett 2-fund portfolio that offers another approach to long-term investing. When investors review different options and consult various investment philosophies, they often find that simplicity beats complexity.
The rating and review process for mutual funds typically focuses on expense ratios, performance history, and how well funds track their benchmark indexes. By these measures, Fidelity’s index fund lineup scores highly and provides reliable options for investors at all experience levels.
» Start investing today: Compare top brokerage accounts with our detailed review
Your Next Steps
These 4 Fidelity index funds provide a complete, low-cost portfolio designed for long-term growth. With expense ratios among the lowest in the industry, investors keep more of their money working for them instead of paying fees to fund managers.
The combination of total market exposure, large cap growth, small cap potential, and international diversification creates a balanced approach that has historically delivered strong performance. Remember that consistency beats perfect timing – the key is to start investing and stay invested through market ups and downs.
Here’s what investors can do next as a plan of action. First, open a brokerage or IRA account if not already done. Start with automatic monthly contributions – even small amounts add up significantly over time. Rebalance the portfolio annually to maintain target allocations, and most importantly, stay consistent through market volatility.
When choosing investment products, investors should research the prospectus for each fund to understand the investment objectives, risks, and costs. Taking time to review these details helps ensure the chosen funds align with personal financial goals.
These financial choices align with InvestLane’s mission to help others save and invest wisely for their future. Investors don’t need complicated strategies, frequent trades, or professional management to succeed. A steady plan, clear goals, and an understanding of how these funds work together can create a portfolio designed for long-term results that potentially beat more complex approaches.
For those personally interested in taking control of their financial future, these Fidelity index funds offer a reliable foundation. Whether investing through retirement accounts or taxable brokerage accounts, the combination of low costs, broad diversification, and proven track records makes this 4-fund approach worth serious consideration.
» Get your free InvestLane score: See how your portfolio aligns with your financial health.
