Roth IRA funds to pick - FZROX, FZILX, SCHB, VTI, and ITOT?

Hey Jermey! Saw your insightful post about Roth IRA. Currently I have my Roth split up by 5 funds/ETFs. FZROX, FZILX, SCHB, VTI, and ITOT. I noticed that FZROX and the ETFs I listed are all similar. Is that a smart idea or Is it better to diversify by picking different funds like energy/ real estate etfs? Seems like majority of the funds I picked are the same like tracking the S&P500

Hey Tom!

Great question! So let’s break those down:

  • FZROX: Holds the total US stock market
  • FZILX: Holds the total international stock market
  • SCHB: Holds the total US stock market
  • VTI: Holds the total US stock market
  • ITOT: Holds the total US stock market

So you can see, 4 of the 5 funds/ETFs you have picked are virtually identical. They all hold virtually the exact same stocks and will perform virtually identically. (Also, kudos for picking great, low fee index funds. They’re all great, they’re just all the same).

I’m trying to think of a metaphor… it’s like your wife asks you to buy a bunch of different soda for a party. So you want to have a good assortment, so you go to Krogers and buy some coke, then you go to Vons and buy some coke, then you go to target and you buy some coke and you go to safeway and buy some coke. Then you get home with a bunch of coke and your wife is like “why didn’t you get an assortment” and you’re like “they all came from different stores!” Doesn’t matter… it’s the same stuff inside.

The coke metaphor isn’t TOTALLY fair, because those “total US stock market” funds are fully diversified across the US market. But just don’t need the same thing in 4 different packages.

That said, if you’re trying to have a 100% equity portfolio (no bonds) then you really just need TWO things: US and international stock markets. I’d probably just keep your first two. Something like 70% FZROX and 30% FZILX would be good to go for the rest of your life. Adding more stuff just adds complexity without additional returns. :slight_smile:

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Thanks so much for your response. It makes sense now. I was wondering why you suggested to keep FZROX as the total US stock market fund instead of the other three ETFs? Does FZROX have more companies it invests in? Thank you again for your help!

Hi Jeremy,

Following up to see why you picked FZROX over the other ETFs when they were all similar?

Thanks for your help.

Hey Tom!

Well, from a performance perspective it could have been any of them. I went with FZROX because it “matches” FZILX. They’re both Fidelity index funds. They’re also 0.0% expense ratio funds, where the other three carry very small, but non-zero expense ratios. And I prefer the index fund version over the ETF version. The other three you need to buy in full shares and calculate how many shares you need, etc. The index funds (that always end in X) you just invest in dollars.

I guess I should have confirmed: Are you buying these through a Fidelity account? Are you buying them with $0 transaction fees? (If not, then I definitely wouldn’t go with them)


Yes, I am using the fidelity platform. I was able to buy partial shares of the ETF using their mobile app but online you can’t do that FYI. thank you for answering my question!

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