Quick verdict
FXAIX is the cheapest S&P 500 fund at 0.015% with a $0 minimum, but it is only available at Fidelity. IVV is 0.03% and available at any brokerage. If you use Fidelity, FXAIX is the better deal. If you do not, IVV (or VOO) is your best option.
Head-to-Head Comparison
The FXAIX Advantage: Why 0.015%?
Fidelity can offer FXAIX at 0.015% because they use it as a customer acquisition tool. The expense ratio barely covers costs, but Fidelity makes money from securities lending (lending out the underlying stocks for a fee) and from cross-selling other financial products to FXAIX investors.
On a $100,000 investment, the difference between 0.015% (FXAIX) and 0.03% (IVV or VOO) is $15 per year. Over 20 years with compound growth, that amounts to roughly $300-$400 in total savings. Meaningful, but not life-changing. If switching to Fidelity is inconvenient, IVV or VOO at 0.03% is still an excellent deal.
Every Major S&P 500 Fund (Ranked by Cost)
IVV vs FXAIX FAQ
Is FXAIX the cheapest S&P 500 fund?
Yes. FXAIX charges 0.015% with no minimum investment, making it the cheapest S&P 500 fund available. However, it is only available at Fidelity. Fidelity also offers FNILX at 0.00%, though it tracks a proprietary index rather than the official S&P 500.
What is the difference between IVV and VOO?
Both are S&P 500 ETFs charging 0.03%. IVV is managed by iShares (BlackRock) and VOO by Vanguard. Performance is virtually identical. Choose based on which brokerage ecosystem you prefer. VOO is part of Vanguard's shared portfolio structure, while IVV stands alone.
Why is FXAIX so cheap?
Fidelity uses FXAIX as a loss leader to attract and retain customers in the Fidelity ecosystem. They offset the low expense ratio through securities lending revenue, cross-selling other financial products, and the overall customer lifetime value of keeping investors on the Fidelity platform.
Related Comparisons
Choosing between Fidelity and Schwab? That decision determines whether you can access FXAIX.