If you or your loved ones are looking for ways to improve your financial approach this year, index mutual funds may be a good place to start. These low-cost funds allow you to invest in a broad mix of stocks rather than betting it all on one company. They are crowd favorites because of their ability to diversify your portfolio, which can reduce risk and support steadier returns over time.
Most brokerages offer a range of low-cost index funds. Many of these charge an expense ratio, or a percentage fee paid by the investor that helps the fund cover operating costs. But some brokerages, such as Fidelity and E*TRADE, take it a step further by offering families of index funds with zero expense ratios.
Here’s the scoop on free index funds — and some potential pitfalls you should be aware of.
Fidelity
Back in 2018, Fidelity Investments launched the first-ever index funds with no expense ratios. Today, the “Fidelity ZERO” family includes four such funds, all of which also have no trading fees or investment minimums.
Fidelity ZERO Large Cap Index Fund (FNILX)
Similar to an S&P 500 index fund but tracks a different index and is slightly more tech-heavy.
Fidelity ZERO Extended Market Index Fund (FZIPX)
Tracks a custom index of small-cap and mid-cap U.S. stocks, heavily weighted toward industrials and financials with notable tech and health care exposure.
Fidelity ZERO Total Market Index Fund (FZROX)
Broad custom index of U.S. stocks across small-, mid-, and large-cap companies; less tech-heavy than FNILX but more than FZIPX.
Fidelity ZERO International Index Fund (FZILX)
Invests in large-cap stocks outside the U.S., primarily financial, industrial, and tech stocks from Europe and emerging markets.
E*TRADE
Last April, E*TRADE joined the zero-fee fund party with the launch of its “No Fee Index Funds” family. Like their Fidelity counterparts, E*TRADE’s fee-free mutual funds also have no trading fees or investment minimums.
E*TRADE No Fee Large Cap Index Fund (ETLGX)
Tracks the 500 largest companies in the U.S., largely tech and financial services stocks. Slightly more tech-heavy than the S&P 500 index.
E*TRADE No Fee Total Market Index Fund (ETTOX)
Tracks the largest 3000 U.S. companies, and is slightly less tech-heavy than ETLGX.
E*TRADE No Fee International Index Fund (ETISX)
Contains large-cap stocks from outside the U.S. (mostly Europe and Asia), with heavy weightings toward the financial and industrial sectors.
E*TRADE No Fee Municipal Bond Index Fund (ETMUX)
An index fund of tax-advantaged muni bonds. Its current yield is 3.12%.
E*TRADE No Fee U.S. Bond Index Fund (ETBOX)
Contains a diversified portfolio of U.S. corporate and treasury bonds. Pays income monthly, with a current yield of 4.24%.
What to watch for when investing in free index funds
Fidelity and E*TRADE’s fee-free index funds may have lower costs than their competitors, but there are a few potential catches you should consider before buying them.
Only available from Fidelity or E*TRADE
Most standard mutual funds are available at any broker that offers mutual funds, but Fidelity and E*TRADE’s free funds are exclusive to those respective brokers. If you invest in them and later want to move to another broker, you’ll have to sell them and buy something else.
Proprietary indexes could be less diversified
Most index funds track an established third-party index, such as the S&P 500, and pay licensing fees to the index provider (S&P Global in the case of the S&P 500). To keep costs minimal, Fidelity and E*TRADE maintain their own indexes for their zero-fee funds, which means their returns may slightly diverge from those of similar index funds that charge expense ratios.
In particular, both Fidelity and E*TRADE’s S&P 500-like free funds are a hair more tech-heavy than the S&P 500 index itself, which may be worth keeping in mind amid concerns about an AI bubble in tech.
They could institute fees in the future
In the past, some other financial institutions initially offered funds at no cost but later began charging expense ratios. SoFi offers two exchange-traded funds — the SoFi Select 500 ETF (SFY) and the SoFi Next 500 ETF (SFYX) — that once had completely waived expense ratios, but now charge expense ratios (albeit very small ones).
Performance data above is current as of market close Jan. 29, 2026, and is intended for informational purposes only.
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