Fidelity S&P 500 Index Fund Recommendation

[murphearlyretirement]

I am going to discontinue my Fidelity Portfolio Advisory Service for my IRA, what is a good Index fund to put the IRA into at Fidelity? I am 54.

 

[BigMoneyJim]

Um, well, there's the Fidelity 500 Index Fund...low ER open-ended mutual fund. That's a pretty open-ended question, though.

In my Fid accts I balance between FXAIX (S&P 500) and FXNAX (bond index).

 

[Sunset]

A correct answer would depend upon knowing lots more information. As what would be good for you could be terrible for another person.

So read my answer, then read some books on investing for the long term.

Basically over your entire investment portfolio you can get by with 3 funds
All US stocks 50% (example: FSKAX is Fidelity total Market index fund)

All foreign 15%
All bonds 35%

I'll leave it up to you to find the others, and to adjust the percentages to what you are comfortable with.

 

[Dtail]

I like the FZROX - Total Market fund with zero fees as my majority portion of my equity exposure. The FXAIX - S&P 500 as mentioned above is another choice which has 1.5 bps fund fees.

 

[OldShooter]

Agree with other posters. S&P 500 is a sector fund. People can get by with it because it is 80% of the US market cap, but it misses mid-cap, small-cap, and REITs. No reason to buy any sector(s) if you can buy them all.

 

[CRLLS]

If you prefer an ETF comparable version of FXAIX (S&P 500), then you can get IVV at Fidelity too.

 

[Dtail]

I am going to discontinue my Fidelity Portfolio Advisory Service for my IRA, what is a good Index fund to put the IRA into at Fidelity? I am 54.

Good decision. As you can see in your other thread, it appears that this is the correct choice.

 

[bingybear]

Agree with other posters. S&P 500 is a sector fund. People can get by with it because it is 80% of the US market cap, but it misses mid-cap, small-cap, and REITs. No reason to buy any sector(s) if you can buy them all.

I disagree. I don't see an S&P fund fund as a sector fund. It has multiple sectors. It also is a large cap, not all cap fund. But the OP wanted a S&P500 fund

 

[audreyh1]

I would buy Fidelity Total Market index instead of just the S&P500 index. And are you going for 100% equity allocation in your IRA or do you want bonds as well? Fidelity US bond index fund can fulfill that role.

How many years before you need to draw on your IRA for retirement income?

 

[OldShooter]

I disagree. I don't see an S&P fund fund as a sector fund. It has multiple sectors. It also is a large cap, not all cap fund. But the OP wanted a S&P500 fund

Well, US Large Cap is considered to be a sector by, among others, S&P, Bloomberg, and Morningstar.

There are are lots of ways to slice the market pie into sectors, size and geography are common ones.

 

[bingybear]

Well, US Large Cap is considered to be a sector by, among others, S&P, Bloomberg, and Morningstar.

There are are lots of ways to slice the market pie into sectors, size and geography are common ones.

OK. I looked at morning star and IVV come use as a core S&P fund. XLI comes up as a sector fund. I search is IVV a sector fund and don't see confirmation. Can you direct me to where this info is?

To me this seems to be like saying VO is a sector which it is not. It invests in a style box which contains many sectors.
I may be missing it, but I looked at morningstar and blumburg and did not find confirmation that they are sector funds. Can you direct me to that info?

 

[OldShooter]

OK. I looked at morning star and IVV come use as a core S&P fund. XLI comes up as a sector fund. I search is IVV a sector fund and don't see confirmation. Can you direct me to where this info is?

To me this seems to be like saying VO is a sector which it is not. It invests in a style box which contains many sectors.
I may be missing it, but I looked at morningstar and blumburg and did not find confirmation that they are sector funds. Can you direct me to that info?

Sorry. Life is too short to argue about something like this. You don't consider US Large Cap to be a sector? Fine.

 

[target2019]

Only investopedia can solve this.

 

[scrabbler1]

I am going to discontinue my Fidelity Portfolio Advisory Service for my IRA, what is a good Index fund to put the IRA into at Fidelity? I am 54.

I have FXAIX as my IRA's stock fund. There was a merger into this fund from FUSVX which was another S&P500 fund. I also have an investment grade bond fund in my IRA.

 

[54andchange]

I like the FZROX - Total Market fund with zero fees as my majority portion of my equity exposure. The FXAIX - S&P 500 as mentioned above is another choice which has 1.5 bps fund fees.

Never pay Wall Street! Brand new FNILX Zero Fee Large Cap saves $300 every year on a one million dollar portfolio over the .03% I also pay at Schwab. Will be moving some more accounts to Fidelity. FREE and FIREd at last.

in case you haven't been following very recent developments in this land of new "freedom", here are the other two completely free funds at fidelity FYI:

FZROX broad market
FZIPX. Mid and Small Cap

 

[target2019]

Standard and Poors defines their S&P 500 thing like this:

The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities. There is over USD 9.9 trillion indexed or benchmarked to the index, with indexed assets comprising approximately USD 3.4 trillion of this total. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization.

ref: https://us.spindices.com/indices/equity/sp-500

For that reason, I'll continue to call the index an index, and the sub-categories of the index, "sectors." I couldn't find any references which call the S&P 500 a "sector."

 

[target2019]

Never pay Wall Street! Brand new FNILX Zero Fee Large Cap saves $300 every year on a one million dollar portfolio over the .03% I also pay at Schwab. Will be moving some more accounts to Fidelity. FREE and FIREd at last.

in case you haven't been following very recent developments in this land of new "freedom", here are the other two completely free funds at fidelity FYI:

FZROX broad market
FZIPX. Mid and Small Cap

Zero is a nice rate. I wonder if they will go to negative bps someday, and pay you to stash your future on their computers?

If Bogle were alive, would he transfer his wealth to FZROX?

 

[Dtail]

Never pay Wall Street! Brand new FNILX Zero Fee Large Cap saves $300 every year on a one million dollar portfolio over the .03% I also pay at Schwab. Will be moving some more accounts to Fidelity. FREE and FIREd at last.

in case you haven't been following very recent developments in this land of new "freedom", here are the other two completely free funds at fidelity FYI:

FZROX broad market
FZIPX. Mid and Small Cap

Umm, FZROX is clearly mentioned in my post.....

 

[bingybear]

Umm, FZROX is clearly mentioned in my post.....

Go look at his actual post! He even quoted you! So I would say he noticed.

 

[Running_Man]

Agree with other posters. S&P 500 is a sector fund. People can get by with it because it is 80% of the US market cap, but it misses mid-cap, small-cap, and REITs. No reason to buy any sector(s) if you can buy them all.

There is an entire sub-sector in the S&P500 for REITS, Certainly is an included sector
https://www.marketwatch.com/story/reit-sector-is-the-sp-500s-strongest-as-drop-in-treasury-yields-gives-a-boost-2018-03-28


Company Name Ticker Entrance Date
S&P 500
Some of the companies are:
AIMCO AIV 3/13/2003
Alexandria Real Estate Equities ARE 3/20/2017
American Tower Corp. AMT 11/16/2007
AvalonBay Communities AVB 1/9/2007
Boston Properties BXP 3/31/2006
Crown Castle International CCI 3/14/2012
Digital Realty Trust DLR 5/17/2016
Duke Realty Corporation DRE 7/26/2017
Equinix, Inc. EQIX
Equity Residential EQR 11/1/2001
Essex Property Trust ESS 4/1/2014
Extra Space Storage EXR 1/15/2016
Federal Realty Investment Trust FRT 1/29/2016
HCP, Inc. HCP 3/31/2008
Host Hotels & Resorts HST 3/19/2007
Iron Mountain IRM 1/5/2009
Kimco Realty Corporation KIM 4/3/2006
Macerich MAC 5/8/2013
Mid-America Apartment Communities, Inc. MAA 12/1/2016
Prologis PLD 7/16/2003
Public Storage, Inc. PSA 8/18/2005
Realty Income Corporation O 4/6/2015
Regency Centers REG 3/2/2017
SBA Communications Corp. SBAC 9/1/2017
Simon Property Group SPG 6/25/2002
SL Green Realty Corp. SLG 12/23/2008
UDR UDR 3/4/2016
Ventas, Inc. VTR 3/4/2009
Vornado Realty Trust VNO 8/11/2005
Welltower, Inc. HCN 1/30/2009
Weyerhaeuser WY 3/31/1964
There is of course several ETF's that actually mimic the S&P500 REIT sector and Invesco has a ETF that uses equal weight, which is different from the marketcap approach.

EWRE

 

[OldShooter]

There is an entire sub-sector in the S&P500 for REITS, Certainly is an included sector ...

Thank you. I didn't realize that there were that many from the REIT sector.

 

[OldShooter]

Standard and Poors defines their S&P 500 thing like this:
ref: https://us.spindices.com/indices/equity/sp-500

For that reason, I'll continue to call the index an index, and the sub-categories of the index, "sectors." I couldn't find any references which call the S&P 500 a "sector."

So the S&P 500 is then a subcategory/aka sector of the total US market Russell 3000, Wilshire 5000 indices and of the ACWI. My point exactly. I agree.

There are lots of ways to slice up the total world stock market pie. One way is by line of business, another is by company size, another by geographic location, etc. And combinations are allowed. For example, the EAFE index is large companies in developed non-US markets. MSCI offers an emerging markets energy index. But the bottom line is that any time you are investing in less than the total pie, you are necessarily making bets on the pie slices you have chosen -- whether you call them sectors or not. If @bingybear wants to call some of the slices by some other name, that is his choice but it doesn't change anything.

(Edit: For the mathematicians, all of the pie slices are proper subsets of the world stock market. There is nothing to distinguish them except selection criteria.)

 

[Running_Man]

The major reason over the long run S&P500 works nearly as well is that if any small company comes up and grows tremendously, they get included in the S&P500, assuming a US company. Therefore the only difference between the S&P500 and the Russell 3000 will be how small companies are doing in the economy better or worse than the S&P500 and the effective difference is divided by 5 for market cap. so for VTI to do 2 percent better in a year than the S&P500 small stocks would need to outperform large stocks by 10 percent in the year. Of course this would lead some of these stocks to grow and become part of the S&P500 and losers to drop off the S&P500.
Over twenty years the difference is difference between $10,000 in VTI becomes $20,764 and SPY $19,342. Over the last 10 years from the bottom of the bear market $10,000 became 32,216 in VTI and $31,807 in SPX .

VTI is probably the better choice as a one fund, but only very marginally

 

[OldShooter]

... VTI is probably the better choice as a one fund, but only very marginally

Agreed.

I think the bigger question and a hard one to answer is the degree of home country bias a portfolio should have. VTI holds the US sector of the world market. The last number I saw was that the US was 52% of the world market cap, so about half. Should an investor be ignoring half the world?

 

[Running_Man]

Agreed.

Should an investor be ignoring half the world?

They are not ignoring half the world with the S&P500, these are mostly world class companies operating across the globe. I would not want 50% of my stock portfolio to be under accounting rules in place in China, Hong Kong and Brazil or Japan.