Fidelity Total Stock Market Index Fund (FSKAX): A Comprehensive Guide

Fidelity Total Stock Market Index Fund (FSKAX)

Are you seeking a straightforward, cost-efficient way to gain exposure to the entire U.S. stock market? Look no further than the Fidelity Total Stock Market Index Fund (FSKAX), a behemoth in the index fund landscape. With assets under management exceeding $1 trillion, FSKAX offers investors a slice of the largest and most dynamic equity market globally.

Understanding FSKAX

FSKAX is a passively managed index fund that mirrors the performance of the Total Stock Market Index, a broad market index encompassing over 3,500 U.S.-based publicly traded companies of all sizes. By investing in FSKAX, you effectively own a tiny piece of virtually every major business in the American economy.

Investment Objective

FSKAX's primary goal is to provide investors with long-term capital appreciation by tracking the Total Stock Market Index. It seeks to replicate the index's performance as closely as possible, offering broad market exposure without the need for active management.

Key Features

• Low fees: FSKAX boasts an expense ratio of just 0.015%, making it one of the most cost-effective index funds available.
• Highly diversified: With over 3,500 holdings, FSKAX offers unparalleled diversification, reducing portfolio volatility and enhancing risk management.
• Tax efficiency: FSKAX is structured as a mutual fund, providing tax advantages to long-term investors, particularly those holding it in tax-advantaged accounts like IRAs and 401(k)s.
• Wide accessibility: FSKAX is available through various investment platforms, including Fidelity's own, making it accessible to investors of all experience levels.

Historical Performance

Over the past decade, FSKAX has consistently outperformed the S&P 500 Index, a benchmark for large-cap U.S. stocks. From 2013 to 2022, FSKAX returned an annual average of 12.13%, compared to 10.66% for the S&P 500.

Benefits of Investing in FSKAX

Investing in FSKAX offers numerous advantages:

• Instant diversification: FSKAX provides instant diversification across the entire U.S. stock market, eliminating the need for individual stock selection and mitigating risk.
• Cost-effectiveness: Its incredibly low expense ratio keeps investment costs minimal, maximizing your returns.
• Long-term growth potential: The broad market exposure of FSKAX aligns with long-term market trends, offering the potential for capital appreciation over time.
• Tax efficiency: Long-term investors benefit from FSKAX's tax-advantaged structure, especially when held in tax-advantaged accounts.
• Simplicity: Investing in FSKAX is straightforward, requiring minimal time and effort, making it suitable for both novice and experienced investors.

Fidelity Total Stock Market Index Fund (FSKAX): A Comprehensive Guide

Considerations Before Investing

While FSKAX offers several advantages, potential investors should consider the following factors:

• Market fluctuations: As an index fund tracking the entire stock market, FSKAX is subject to market fluctuations and may experience short-term losses during market downturns.
• No dividends: Unlike some other index funds, FSKAX does not pay dividends. Reinvested dividends can enhance long-term returns, but FSKAX focuses solely on capital appreciation.
• Limited control: As a passively managed fund, FSKAX does not provide any active management or stock selection. Investors seeking more control over their investments may prefer actively managed funds.

Who Should Invest in FSKAX?

FSKAX is an ideal investment for:

• Long-term investors: Investors with a long investment horizon who seek broad market exposure and growth potential.
• Risk-averse investors: Investors seeking diversification and risk mitigation by investing across the entire U.S. stock market.
• Novice investors: Investors new to investing who want a simple and cost-effective way to gain market exposure.
• DIY investors: Investors who prefer to manage their own investments and seek a highly diversified and tax-efficient option.
• IRA and 401(k) investors: Investors seeking a tax-advantaged way to invest for retirement.

Alternatives to FSKAX

While FSKAX is a well-established and popular choice, there are other index funds that offer similar benefits. Here are some alternatives:

Conclusion

Fidelity Total Stock Market Index Fund (FSKAX) offers investors an unparalleled combination of low costs, broad diversification, and tax efficiency. Its track record of outperforming the S&P 500 Index over the long term makes it an attractive choice for investors seeking broad market exposure and long-term growth potential. Whether you're a seasoned investor or just starting out, FSKAX is an excellent option to consider for a core holding in your investment portfolio.

Additional Resources

• Fidelity Total Stock Market Index Fund (FSKAX)
• Vanguard Total Stock Market Index Fund (VTI)
• Schwab Total Stock Market Index Fund (SWTSX)
• iShares Core S&P Total U.S. Stock Market ETF (ITOT)
• SPDR Portfolio S&P 500 ETF (SPY)