FZILX: Your Free Passport to Global Markets

Since its launch in 2018, FZILX has emerged as a standout in Fidelity’s ZERO lineup, offering international diversification with a 0% expense ratio. With $6.2 billion in assets under management (AUM) as of May 2025, this fund has drawn attention for its cost-free access to global markets. But what are the lesser-known facts that make FZILX unique? Let’s dive into its surprises and community insights.

Fees? Truly Zero.

FZILX is part of Fidelity’s revolutionary “ZERO” family, introduced in 2018 as the first mutual funds with a 0% expense ratio. Unlike competitors like Vanguard’s VTIAX (0.11%) or even Fidelity’s FTIHX (0.06%), FZILX charges no management fees. This cost advantage enhances long-term returns through compounding, aligning with the low-cost philosophy of index investing pioneer John Bogle. Learn more at Fidelity’s official page.

Fund	Tracks	Purpose
FZROX	U.S. Total Market Index	Broad exposure to the U.S. equity market.
FNILX	U.S. Large Cap Index	Focused exposure to large-cap U.S. stocks.
FZIPX	U.S. Extended Market Index	Complements large-cap funds with mid- and small-cap stocks.
FZILX	Global ex U.S. Index	Diversification through international equities.

Surprising Fact: Fidelity subsidizes FZILX’s operating costs, possibly as a loss leader to attract investors to its platform, where they may engage with higher-margin services like advisory or active funds.

Global Exposure, Selective Focus

FZILX tracks the Fidelity Global ex U.S. Index, covering over 2,300 large- and mid-cap stocks in developed and emerging markets, excluding the U.S. Unlike peers like FTIHX, which includes small-cap stocks, FZILX omits them, potentially reducing volatility but missing out on small-cap growth periods. Top holdings include Taiwan Semiconductor, Tencent, and SAP, with the top 10 comprising 12.3% of assets (Morningstar).

Surprising Fact: By excluding small-caps, FZILX outperformed FTIHX in Q4 2018 when small-caps underperformed, a nuance that may catch investors off guard expecting broader market coverage (Motley Fool).

Performance

Since its inception on August 2, 2018, FZILX has delivered solid returns, though less predictable than U.S.-focused funds due to global market volatility. From 2019 to 2024, it achieved a cumulative return of approximately 85%, trailing U.S. indices like the S&P 500 (110%) but aligning with international benchmarks (Yahoo Finance). Its low turnover (3%) ensures tight index tracking, minimizing deviations (MutualFunds.com).

Caption: FZILX vs. MSCI ACWI ex USA · Powered by Portfolio Analyzer

Surprising Operational Strategies

Loss Leader Model

Fidelity likely uses FZILX to draw investors to its ecosystem, cross-selling services like wealth management. This strategy offsets the zero-fee structure, a fact that may surprise those assuming pure cost savings (Financial Tortoise).

Securities Lending

FZILX generates revenue by lending securities, earning 1–5 basis points annually, which helps sustain its zero-fee model. This practice, while standard, carries minor risks like counterparty default, mitigated by collateral (SEC Filing).

Currency Risk Exposure

FZILX does not hedge currency risk, exposing investors to foreign exchange fluctuations. This can amplify or dampen returns, a critical consideration for those unaware of currency impacts (SEC Filing).

Rapid Growth

With $6.2 billion in AUM in under seven years, FZILX reflects strong investor demand for low-cost international exposure, outpacing some traditional funds (Yahoo Finance).

Considerations (What the Community Says)

Drawing from discussions on platforms like Reddit and Bogleheads, here are key investor insights:

1. Marketing Play: Investors note FZILX’s zero fees are a hook to keep assets within Fidelity. A Redditor said, “Great for costs, but Fidelity wants you to stay in their ecosystem” (Reddit Bogleheads).

2. Portability Issues: FZILX cannot be transferred to other brokerages without selling, risking tax consequences. A Bogleheads user cautioned, “Leaving Fidelity means selling FZILX, which could hurt tax-wise” (Bogleheads).

3. Tax-Advantaged Preference: Community members recommend FZILX for IRAs or 401(k)s due to potential capital gains distributions. A Redditor advised, “Ideal for Roth IRAs, but ETFs are better for taxable accounts” (Reddit Bogleheads).

4. Tax Efficiency: As a mutual fund, FZILX may distribute capital gains, unlike ETFs like VXUS. A Bogleheads user noted, “ETFs avoid capital gains surprises; FZILX might not” (Bogleheads).

5. Small-Cap Exclusion: Investors highlight the lack of small-caps. A Redditor remarked, “FZILX misses small-cap upside, which can matter in some markets” (Reddit Personal Finance).

6. Currency Risk Awareness: Some investors overlook currency risk. A Bogleheads user warned, “Returns can swing wildly with exchange rates—know what you’re signing up for” (Bogleheads).

7. Dividend Frequency: FZILX’s annual dividends (1.8% yield) suit growth investors but not income seekers. A Redditor noted, “Don’t expect frequent payouts with FZILX” (Reddit Personal Finance).

8. Long-Term Viability: While Fidelity’s reputation reassures, some question the zero-fee model’s future. A Bogleheads user asked, “Can Fidelity keep this up forever?” (Bogleheads).

9. Alternatives: For taxable accounts, investors prefer ETFs like VXUS or IXUS for tax efficiency and portability. A Redditor shared, “I use VXUS in taxable and FZILX in my IRA for the best of both” (Reddit Bogleheads).

Regional Allocation

FZILX’s allocation spans Europe (44%), Asia-Pacific (30%), and emerging markets (22%), with top countries including Japan, UK, and China (Morningstar). This contrasts with VTIAX, which includes small-caps and slightly different weightings.

Region	FZILX (%)	VTIAX (%)
Europe	44	~42
Asia-Pacific	30	~31
Emerging Markets	22	~24
North America (ex-U.S.)	4	~3

Conclusion

FZILX’s zero fees, solid performance (85% from 2019–2024), and accessibility make it a compelling choice for investors seeking international diversification, especially in tax-advantaged accounts. Its exclusion of small-caps, currency risk exposure, and portability limitations, however, require careful consideration. For taxable accounts, ETFs like VXUS or IXUS offer tax efficiency and flexibility. FZILX embodies the “zero-fee revolution,” challenging traditional funds and offering a cost-free path to global markets. Fidelity’s innovative approach sets a high bar—will competitors follow suit?

FAQ

What is FZILX? +

FZILX is the Fidelity ZERO International Index Fund, a mutual fund providing exposure to large- and mid-cap stocks in developed and emerging markets outside the U.S.

What does FZILX track? +

FZILX tracks the Fidelity Global ex U.S. Index, covering international equities excluding U.S. companies.

Is FZILX an ETF? +

No, FZILX is a mutual fund offered by Fidelity, not an ETF.

What type of stock is FZILX? +

FZILX is a mutual fund investing in large- and mid-cap international stocks, excluding small-cap stocks.

Is FZILX passively managed? +

Yes, FZILX is passively managed, aiming to replicate the performance of the Fidelity Global ex U.S. Index.

Is FZILX international only? +

Yes, FZILX focuses exclusively on non-U.S. companies in developed and emerging markets.

What is the minimum investment for FZILX? +

There is no minimum investment requirement when purchasing FZILX directly through Fidelity.

How to buy FZILX? +

You can buy FZILX through a Fidelity brokerage account. Open an account online if you don’t have one. Other brokerages may offer it with fees or restrictions.

Where can I buy FZILX? +

The easiest way to buy FZILX is through Fidelity’s website or a Fidelity brokerage account.

How does FZILX make money? +

FZILX generates returns from the growth and dividends of its international stock holdings, passed on to investors.

Why is FZILX so cheap? +

FZILX has a 0% expense ratio, with Fidelity covering operating costs, likely to attract investors to its platform.

Is FZILX a good fund? +

FZILX is a strong choice for cost-conscious investors seeking international diversification, especially in tax-advantaged accounts.

Does FZILX include U.S. stocks? +

No, FZILX excludes U.S. stocks, focusing solely on international markets.

What is the difference between FZILX and FTIHX? +

FZILX has a 0% expense ratio and excludes small-cap stocks, while FTIHX (0.06% expense ratio) includes small-caps for broader exposure.

Which is better, FZILX or VXUS? +

FZILX offers zero fees but is less portable and may be less tax-efficient. VXUS, an ETF, provides portability and tax efficiency, suitable for taxable accounts.

Is FZILX taxable? +

In a taxable account, FZILX’s dividends and capital gains distributions are subject to taxation.

How often does FZILX pay dividends? +

FZILX typically pays dividends annually, based on income from its holdings.

Is FZILX a dividend stock? +

FZILX is not a traditional dividend stock but distributes dividends annually from its international holdings.

How much of FZILX is large-cap? +

FZILX primarily invests in large- and mid-cap stocks, with large-caps dominating due to its index composition.

What is the future of FZILX? +

FZILX’s performance depends on global market trends. Its zero-fee structure makes it a long-term contender for cost-conscious investors.

How much to invest in FZILX? +

Investment amounts depend on your goals, risk tolerance, and portfolio strategy. FZILX suits both small and large investments.

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Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investing involves risks, including the possible loss of principal. Always conduct your own research before making investment decisions.