Fidelity

From Bogleheads
Jump to: navigation, search

Fidelity Investments is the marketing name for FMR LLC, a giant Boston-based mutual fund company and financial supermarket, and Vanguard's biggest competitor in recent years. [1] Fidelity is sometimes credited with transforming the mutual fund business from a stodgy conservative world of funds managed by committee into the model of active funds managed by stock-picking superstar managers.

Boglehead-style investing at Fidelity

The building blocks of Boglehead-style investing are low-expense-ratio index mutual funds and/or ETFs. Vanguard fans would suggest that Vanguard has the best and most complete lineup of such funds, and that the most convenient place to hold Vanguard mutual funds is directly at Vanguard. Thus, the Bogleheads forum and Wiki tends to be Vanguard-oriented. But investing according to the Boglehead philosophy certainly does not require you to invest at Vanguard or use Vanguard products. Here are some notes on how to do it at Fidelity.

Writers have striven for accuracy, but investors should verify information before taking action.

Tools for Boglehead-style investing

  • Don't overlook the 65 iShares ETFs for which Fidelity offers free online trades. They satisfy the criteria of "low-cost index ETFs" that cover most asset classes an ordinary investor would need. In 3/2013 Fidelity announced the expansion of the list from 30 to 65; Ten funds were removed but close replacements were added; a $7.95 short-term trading fee is now assessed if you sell one of these funds within 30 days of buying it; for details see Fidelity's FAQ.
  • Don't overlook the Fidelity Spartan mutual funds. These are Fidelity's counterpart to Vanguard, very-low-expense-ratio index funds. The minimum required to invest in Spartan mutual funds is $2,500 per fund. Broadly, Spartan Investor Class funds have expense ratios that could be called "competitive" with Vanguard's Investor Class. As of fall of 2011, Fidelity has been expanding their Spartan lineup and you should check their site for available funds and their expense ratios. The best way to get the whole list is to select "Research," "Mutual funds," and type "Spartan" into the "Fund facts" search box.
  • As of January 2013, Fidelity "Advantage" shares with lower expense ratios are available at a $10,000 minimum, the same minimum investment required for the Vanguard Admiral Class index funds. This table shows the rough correspondence between Vanguard funds and their Fidelity Spartan counterparts, but in many cases they track different indexes and are not precisely equivalent. (See the appropriate asset class article in index returns for historical return comparisons among various indexes.)
Vanguard Fund Similar Fidelity Spartan Fund Notes
US Stocks
Vanguard Total Stock Market Index Fund (VTSAX) Fidelity Spartan Total Market Index Fund (FSTVX) Fidelity tracks the Dow Jones US Total Stock Market Index. Vanguard tracks the CRSP Total Market Index.
Vanguard 500 Index Fund (VFIAX) Fidelity Spartan 500 Index Fund (FUSVX) Both funds track the S&P 500 index.
Vanguard Extended Market Index Fund (VEXAX) Fidelity Spartan Extended Market Index Fund (FSEVX) Extended market index funds are intended to be mixed with a 500 Index fund to approximate the total market. Fidelity tracks the Dow Jones U.S. Completion Total Stock Market Index [2] Vanguard tracks the S&P Completion Index.
Vanguard Mid Cap Index Fund (VIMAX) Fidelity Spartan Mid Cap Index Fund (FSCKX) Fidelity tracks the Russell Mid Cap Index. Vanguard tracks the CRSP US Mid Cap Index.
Vanguard Small Cap Index Fund (VSMAX) Fidelity Spartan Small Cap Index Fund (FSSVX) Fidelity tracks the Russell 2000 Index . Vanguard tracks the CRSP US Small Cap Index Index [3]
Vanguard REIT Index Fund (VGSLX) Fidelity Spartan Real Estate Index Fund (FSRVX) Fidelity tracks the Dow Jones U.S. Select Real Estate Securities Index. Vanguard tracks the MSCI US REIT Index.
International Stocks
Vanguard Total International Stock Index (VTIAX) Fidelity Spartan Global ex U.S. Index Fund (FSGDX) Vanguard: Tracks FTSE Global All Cap ex US Index, includes small caps. Fidelity: Tracks MSCI ACWI Ex-US - no small caps.
Vanguard Developed Markets Index Fund (VTMGX) [4] Fidelity Spartan International Index Fund (FSIIX/FSIVX) Fidelity: Tracks MSCI EAFE Index (Morgan Stanley Capital International Europe, Australasia, Far East Index). The Vanguard fund tracks the FTSE Developed ex North America Index.
Vanguard Emerging Markets Index Fund (VEMAX) Fidelity Spartan Emerging Markets Index Fund (FPMAX) Fidelity tracks the FTSE Emerging Index. Vanguard currently tracks the FTSE Emerging Index.
US Bonds
Vanguard Short-Term Treasury Bond Fund (VFISX) Fidelity Spartan Short-Term Treasury Bond Index Fund (FSBAX) Vanguard: Not an index fund
Vanguard Intermediate-Term Treasury Fund (VFITX) Fidelity Spartan Intermediate Treasury Bond Index Fund (FIBAX) Vanguard: Not an index fund.
Vanguard Inflation Protected Securities Fund (VIPSX) Fidelity Spartan Inflation-Protected Bond Index Fund (FSIYX) Vanguard: Not an index fund.
Vanguard Long-Term Treasury Bond Fund (VUSTX) Fidelity Spartan Long-Term Treasury Bond Index Fund (FLBAX) Vanguard: Not an index fund
Vanguard Total Bond Market Index Fund (VBTLX) Fidelity Spartan U.S. Bond Index Fund (FSITX) Fidelity tracks the Barclays Capital U.S. Aggregate Bond Index. Vanguard tracks the Barclays Capital U.S. Aggregate Float Adjusted Index.
Balanced Funds
Vanguard Target Retirement Funds Fidelity Freedom® Index Funds The expense ratios are comparable. Go by the fund's composition (asset allocation), not the date. Also see: Vanguard target retirement funds.


  • Fidelity Four-In-One Index Fund is an interesting possibility for a beginner's fund, with a low 0.23% expense ratio. It is a fund-of-funds, all index funds, with about 60% total domestic stock market (in two funds), 25% international, and 15% bonds.
  • The transaction fees to buy Vanguard mutual funds at Fidelity are quite high --$75 for the first purchase, but subsequent purchases can be $5 per purchase if you set up an automatic investment plan. In addition, Vanguard has ETF equivalents for most of its index funds. Like other stocks and ETFs, Vanguard ETFs can be bought and sold at Fidelity for around $7.95--but check Fidelity for current fee details which may vary depending on your account size. If you want to use actual Vanguard products, using Vanguard ETF's is probably the cheapest way to do so at Fidelity.
  • Fidelity offers individual treasury bonds (both nominal and TIPS) at auction free of commission or any markup or fees if you place your orders online. There is no limit on account size. No separate account is needed. The minimum purchase is $1,000.

Fidelity tips, links, and general orientation

Whereas the default account at Vanguard is a mutual fund account, in which you can only buy Vanguard mutual funds (all other products require a separate Vanguard Brokerage Service account), the default account at Fidelity is a brokerage account. You can buy mutual funds (Fidelity and non-Fidelity funds), ETFs, individual stocks, bonds, and brokered CDs all within the same Fidelity account. As of November 2010:

  • Fidelity's full fee schedule is here.

See also

References

  1. Vanguard's major competitors in Exchange Traded Funds are Blackrock ishares and State Street.
  2. See, Dow Jones US Total Stock Market Indexes Literature.
  3. Vanguard also offers the Vanguard Russell 2000 ETF.
  4. The fund is also available as the Vanguard FTSE Developed Markets ETF