Fidelity's ZERO funds at 0.00%, Vanguard's 0.04% VTSAX, Schwab's 0.03% SCHB, M1 Finance's automated rebalancing, and Merrill Edge's Preferred Rewards compared. The difference between picking the wrong broker and the right one compounds into six figures over a 30-year investing horizon.
The Expense Ratio Math is Stark
On $100,000 over 30 years: 0.00% ER earns you $245,000 more than a 1.00% ER fund. The best funds are free. The worst cost you a house.
Lowest Cost
Fidelity
FZROX at 0.00% ER
Most Trusted Name
Vanguard
The original index fund
Best Automation
M1 Finance
Auto-rebalances for free
Bottom line: For most investors building wealth through index funds, Fidelity is the top choice — the 0.00% ZERO funds are a permanent edge over every alternative. If you're philosophically committed to Vanguard's ownership model, VTSAX at 0.04% is negligibly more expensive. If you want hands-off automation, M1 Finance is unmatched. All five options beat the average actively managed fund by a significant margin over any 20+ year period.
FZROX 0.00% · FZILX 0.00% · $0 minimums · Strong platform
Fidelity wins for index fund investors purely on the economics: their ZERO fund family (FZROX for US total market, FZILX for international) carry 0.00% expense ratios — no other broker or fund family offers this. On a $100,000 portfolio held for 30 years, even the difference between 0.00% and 0.03% (Vanguard's VTSAX equivalent) compounds to over $8,000 in extra wealth. Beyond the ZERO funds, Fidelity's platform has excellent automatic investment scheduling, fractional shares on thousands of stocks and ETFs, no account minimums, and strong retirement account options. For investors who prioritize cost minimization above all else, the decision is straightforward.
Strengths
Limitations
VTSAX 0.04% · Investor-owned structure · IRA specialist
Vanguard invented the index fund in 1976 — Jack Bogle's creation of VFINX (now VFIAX) launched the passive investing revolution. The structural reason Vanguard's funds are cheap is unique: Vanguard's funds own Vanguard as a company, which means there are no outside shareholders extracting profit from fund expenses. VTSAX (Total Stock Market Index) at 0.04% and VTIAX (International) at 0.11% are benchmarks in the industry. The platform is less slick than Fidelity's, but for pure long-term, set-and-forget index investing — particularly in IRAs — Vanguard remains deeply trusted.
Strengths
Limitations
SCHB 0.03% · No minimums · thinkorswim included
Schwab offers a near-perfect combination for investors who want Vanguard-level expense ratios but a much better platform. Schwab's own index ETFs (SCHB for US total market at 0.03%, SCHF for international at 0.06%) are among the cheapest available outside of Fidelity's ZERO funds. The platform is excellent — well-designed interface, strong research, solid mobile app. Schwab also offers automatic investment into ETFs, fractional shares, and all major account types. A referral bonus through our link adds tangible value when opening a new account.
Strengths
Limitations
Free auto-rebalancing · Pie portfolios · No commissions
M1 Finance occupies a unique niche: it's not quite a traditional broker and not quite a robo-advisor. Their 'Pie' portfolio system lets you build a portfolio of stocks and ETFs with target allocations, and M1 automatically rebalances on contributions and dividends to keep you on target. For index investors who want a simple three-fund portfolio — US total market, international, bonds — running at exact target allocations without manual rebalancing, M1 is the most elegant solution available. No management fee, no commissions.
Strengths
Limitations
$0 commissions · Preferred Rewards · BofA integration
Merrill Edge's primary competitive advantage is its deep Bank of America integration. Through the Preferred Rewards program, investors with $20,000+ in combined BofA + Merrill Edge accounts earn 25–75 extra basis points in cashback on BofA credit cards — which, for regular savers, can add meaningful extra returns beyond investment performance alone. The platform is good for index investors: $0 commissions, solid ETF selection, and decent IRA options. The investment tools are less powerful than Fidelity or Schwab, but for BofA customers who want everything under one roof, it's a compelling choice.
Strengths
Limitations
The evidence on this question is overwhelming and has been for decades. Multiple independent academic studies, SPIVA (S&P Indices vs Active) reports, and Morningstar data consistently show that over any rolling 15-year period, more than 88% of active US equity funds underperform their benchmark index — and that's before accounting for the additional expense ratios they charge.
88%+
of active US equity funds underperform their index over 15 years, largely due to expense drag. Every basis point you don't pay in fees goes directly to your return.
3,700+
companies in a single VTI or FZROX purchase. No single-stock risk. No sector concentration. One fund, the entire market.
$247K
extra wealth from investing $500/month for 30 years at 8% vs the same investor who missed the 10 best days by trying to time the market.
The most popular broad-market index funds available at the major brokers, sorted by expense ratio.
| Fund | Exp. Ratio | Min. Investment | Type | Availability |
|---|---|---|---|---|
| Fidelity FZROX (US Total Market) | 0.00% | $1 | Mutual Fund | Fidelity only |
| Fidelity FZILX (International) | 0.00% | $1 | Mutual Fund | Fidelity only |
| Vanguard VTI (US Total Market ETF) | 0.03% | ~$200 | ETF | All brokers |
| Vanguard VTSAX (US Total Market) | 0.04% | $3,000 | Mutual Fund | All brokers |
| Schwab SCHB (US Total Market ETF) | 0.03% | $1 | ETF | All brokers |
| Fidelity FSKAX (US Total Market) | 0.015% | $1 | Mutual Fund | Fidelity only |
| iShares ITOT (US Total Market ETF) | 0.03% | ~$100 | ETF | All brokers |
| Vanguard VXUS (International ETF) | 0.07% | ~$60 | ETF | All brokers |
| Vanguard BND (US Bond Market ETF) | 0.03% | ~$75 | ETF | All brokers |
Medal icon = category winner. Fidelity ZERO funds cannot transfer in-kind to other brokers.
FZROX (Fidelity ZERO Total Market Index Fund) and FZILX (Fidelity ZERO International Index Fund) carry literally zero expense ratios. Fidelity makes money from other services; these funds are offered as loss leaders to attract and retain long-term investors. There are no comparable funds at any other broker.
Total Market Index Fund
Covers the US total stock market — large, mid, small, and micro-cap — at zero expense. Comparable to VTI or SCHB but cheaper.
International Index Fund
Covers developed and emerging international markets at zero expense. Comparable to VXUS but cheaper. Complements FZROX for global diversification.
Fidelity ZERO funds cannot transfer in-kind to another broker. If you want to move to Vanguard or Schwab someday, you'll need to sell first — which triggers capital gains taxes in a taxable brokerage account (though not in a Roth IRA). For long-term investors committed to Fidelity, this is a non-issue. For investors who might want portability, SCHB or VTI are nearly as cheap and fully transferable.
Vanguard's structural uniqueness sets it apart from every other investment company. Because Vanguard's funds own Vanguard as a company (there are no outside shareholders), there's no profit motive to charge higher fees. The funds operate at cost. This explains why Vanguard's expense ratios have been consistently declining for 40+ years — they pass savings directly to fund shareholders.
US Total Market. VTI is the ETF version (min ~$1), VTSAX is the mutual fund (min $3,000). Both track the CRSP US Total Market Index.
International Total Market. Covers ~6,000 non-US stocks across developed and emerging markets. VTI + VXUS = the global stock market.
US Bond Market. Covers investment-grade bonds — Treasuries, corporate, and mortgage-backed. Core holding for balanced index portfolios.
Vanguard vs Fidelity ZERO: VTSAX at 0.04% costs $40/year on $100,000. FZROX at 0.00% costs $0. Over 30 years at 8% returns, this difference compounds to ~$8,000 in Fidelity's favor. Not life-changing — but it's real money, and Fidelity's platform is arguably better. The choice for pure cost minimizers is Fidelity. The choice for investors who prioritize the Bogleheads community and Vanguard's ownership model is Vanguard.
The single most powerful wealth-building behavior is automatic regular contributions — dollar-cost averaging on autopilot. Here's how each broker handles it:
| Broker | Auto-Invest | Auto-Rebalance | DRIP | Fractional |
|---|---|---|---|---|
| Fidelity | Yes — stocks, ETFs, mutual funds | Manual or with advisor | Yes | Yes — 7,000+ securities |
| Vanguard | Yes — mutual funds | Manual | Yes | ETF fractional via Vanguard Brokerage |
| Schwab | Yes — ETFs and funds | Manual or Schwab Intelligent | Yes | Yes — Schwab Stock Slices |
| M1 Finance | Yes — full automation | Automatic on contribution | Yes — into target allocations | Yes — all holdings |
| Merrill Edge | Limited | Manual | Yes | Limited |
DRIP = Dividend Reinvestment Plan. M1 Finance is the only broker that automatically rebalances on every contribution for free.
| Your Situation | Best Pick |
|---|---|
| Pure cost minimizer, don't plan to switch brokers | Fidelity (FZROX/FZILX) |
| Bogleheads follower, three-fund portfolio purist | Vanguard or Fidelity |
| Want great platform + low costs + potential bonus | Schwab |
| Want fully automated rebalancing without robo-advisor fees | M1 Finance |
| Already a Bank of America customer | Merrill Edge |
| Building a Roth IRA as your primary vehicle | Fidelity or Vanguard |
| Want to learn more over time (not purely passive) | Fidelity or Schwab |
| Contributing automatically every paycheck | Fidelity or M1 Finance |
FZROX + FZILX at 0.00% — the lowest-cost index funds on Earth, combined with the best free broker platform
The math is simple: 0.00% beats 0.03% beats 0.04%, and the compounding impact over decades is real money. Fidelity's platform is also excellent, with automatic investment scheduling, fractional shares, and strong IRA tooling. Vanguard remains the gold standard for investors who prioritize the Boglehead ownership model and portability. If you want the most hands-off experience possible, M1 Finance's automatic rebalancing is a category of its own.
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Each guide ranks 4–5 brokers head-to-head with a clear verdict.
View all on blogAn index fund is a fund that holds all (or nearly all) of the securities in a specific index — like the S&P 500, the total US stock market, or the total international market — in proportion to their weight in that index. Because they don't require active management or stock selection, they have extremely low expense ratios and consistently outperform most actively managed funds over long periods. The core advantage is simple: you pay almost nothing in fees, get broad diversification, and capture the return of the market rather than trying to beat it.
The expense ratio is the annual percentage fee charged by a fund to cover operating costs. At 0.03%, you pay $30 per year on $100,000 invested. At 1.00%, you pay $1,000. The real impact is in compounding: over 30 years at 8% returns, a $100,000 investment at 0.03% grows to roughly $998,000, while the same investment at 1.00% grows to only $761,000 — a $237,000 difference from fees alone. Minimizing expenses is the single most controllable factor in long-term investment performance.
Fidelity ZERO funds (FZROX for US total market, FZILX for international) carry 0.00% expense ratios — the lowest available from any fund family. This means literally no annual cost. The trade-off is that these funds are Fidelity-proprietary: if you want to move to another broker, you must sell and transfer cash (triggering a taxable event in non-IRA accounts), since they can't transfer in-kind. For investors committed to staying at Fidelity long-term — or in a Roth IRA where there's no immediate tax consequence — the ZERO funds are the most economical choice available anywhere.
Both are excellent choices for index investing. ETFs trade like stocks throughout the day (you buy at market price), while index mutual funds price once daily at net asset value (NAV). For automatic investment — setting up recurring contributions — mutual funds are often more convenient since you can invest exact dollar amounts. ETFs are easier to transfer between brokers without selling. For most investors the differences are minor; the more important factor is expense ratio, which is typically equivalent between ETF and mutual fund versions of the same index.
The three-fund portfolio is a simple, widely-respected index investing strategy popularized by the Bogleheads community: (1) a US total stock market index fund, (2) an international total stock market index fund, and (3) a US bond market index fund. The allocation between them depends on your age and risk tolerance — a common starting point is age in bonds (so a 30-year-old holds 30% bonds, 70% stocks). All five brokers in this guide support a three-fund portfolio. Fidelity and Schwab offer the most cost-efficient implementations.
Fidelity and Vanguard are both excellent for Roth IRA index investing. Fidelity's ZERO funds (FZROX/FZILX) at 0.00% have no in-kind transfer issue in a Roth IRA — if you ever move brokers, you're selling tax-free inside the IRA anyway. Vanguard's VTSAX at 0.04% is slightly more expensive but has broad industry trust and is portable. Schwab with SCHB (0.03%) is also strong. All three offer no annual Roth IRA fees and no minimum contributions.