Is FXAIX a mutual fund?

June 2024 ยท 4 minute read

Is FXAIX a Mutual Fund?

There is often confusion surrounding FXAIX and whether it is a mutual fund or not. To address this question directly, the answer is no, FXAIX is not a mutual fund. Instead, it is an index fund offered by Fidelity Investments.

Fidelity Extended Market Index Fund (FXAIX) is designed to track the performance of the US extended market, as represented by the Dow Jones U.S. Completion Total Stock Market Index. This index includes stocks of all sizes, excluding the largest 500 companies in the United States. By investing in FXAIX, you get exposure to a broad range of mid-cap and small-cap companies, allowing for diversification within the US equity market.

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FAQs:

1. Is FXAIX actively managed?

No, FXAIX is passively managed. The fund aims to replicate the performance of its benchmark index rather than be actively managed by a portfolio manager.

2. How does FXAIX differ from a mutual fund?

Unlike mutual funds, which are actively managed and often have higher expense ratios, FXAIX operates as an index fund. It seeks to match the performance of its designated benchmark index without the need for active management.

3. What are the advantages of investing in FXAIX?

Investing in FXAIX can provide cost-effective exposure to a wide range of US mid-cap and small-cap stocks. Additionally, it offers the potential for broad market diversification and has historically shown competitive performance compared to actively managed funds.

4. Can I invest in FXAIX through my 401(k) or IRA?

Yes, FXAIX is available for investment through various retirement accounts, such as 401(k) plans and individual retirement accounts (IRAs).

5. Does FXAIX pay dividends?

Yes, as an index fund, FXAIX distributes dividends to its shareholders based on the dividends received from the underlying stocks in its portfolio.

6. Are there any minimum investment requirements for FXAIX?

Fidelity Investments, the provider of FXAIX, generally does not have a minimum investment requirement for this fund. However, some intermediary platforms or account types may have their own investment minimums.

7. Is FXAIX suitable for long-term investors?

Yes, FXAIX can be suitable for long-term investors seeking exposure to the US extended market. It can serve as a core holding in a diversified investment portfolio.

8. Can I redeem my shares in FXAIX at any time?

Yes, as with most mutual funds and index funds, investors can redeem their shares in FXAIX on any business day.

9. Does FXAIX have any fees or expenses?

Yes, like any investment, FXAIX has expenses associated with managing the fund. However, its expense ratio is typically low compared to actively managed mutual funds.

10. Can I use FXAIX to invest in international markets?

No, FXAIX specifically focuses on the US extended market and does not provide direct exposure to international markets. For international exposure, investors would need to consider other funds or investment vehicles.

11. Does FXAIX have a good track record?

FXAIX has shown competitive performance relative to its benchmark index over the years. However, past performance is not indicative of future results, and it is always important to consider your own investment goals and risk tolerance.

12. Is FXAIX suitable for individual stock pickers?

Individual stock pickers generally prefer to invest in single companies rather than index funds like FXAIX. However, FXAIX can still be a viable option for those seeking diversified exposure to the US mid-cap and small-cap segments of the market.

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