Two Choices for Emerging Market Fund: FPMAX vs VEMAX

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Koichiro
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Two Choices for Emerging Market Fund: FPMAX vs VEMAX

Post by Koichiro » Fri Feb 19, 2016 1:10 pm

I have a quick question regarding fund for emerging markets. My choice is to
either:

(a) invest in FPMAX within a 401k (tax-advantaged) with ER = 0.20, OR
(b) invest in VEMAX in a taxable account (ER = 0.15).

I suppose that option (c) would be to invest some fraction in each.

If my understanding is correct, both track the same index, so the decision amounts to whether the lower ER (by 0.05) in VEMAX is worth more than the tax-benefits of holding FPMAX in 401k.

As background, I intend to hold any purchase for the long-term (>> 25 years). My current tax bracket is 28%, but is likely to increase in the next 10 years.

Thanks for any tips.

P.S. I also note that FPMAX, as with many Fidelity Spartan funds, seems to have a big
discrepancy between gross ER (0.35) and net ER (0.20). This makes me a little nervous; am I suddenly going to end up with +0.15 in my ER? By contrast, VEMAX has gross ER = net ER = 0.15. Should this be a factor in my decision?

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grabiner
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Re: Two Choices for Emerging Market Fund: FPMAX vs VEMAX

Post by grabiner » Sat Feb 20, 2016 11:45 am

The indexes are not the same; Vanguard includes small-caps, and some China A-shares.

But the main criterion should be what you would hold in your taxable account if you don't put the Vanguard fund there. Emerging markets have more non-qualified dividends than developed markets, and thus are slightly less tax-efficient. If you could instead put the taxable money in something tax-efficient such as Total Stock Market Index, it's probably better to hold emerging markets in the 401(k). If you would push a bond fund into your taxable account, it may be better to hold emerging markets in taxable.
Koichiro wrote:P.S. I also note that FPMAX, as with many Fidelity Spartan funds, seems to have a big
discrepancy between gross ER (0.35) and net ER (0.20). This makes me a little nervous; am I suddenly going to end up with +0.15 in my ER? By contrast, VEMAX has gross ER = net ER = 0.15. Should this be a factor in my decision?
Fidelity is waiving some of the fee on the Spartan funds, and has done this for a long time. Fidelity could terminate the fee waiver, but in a 401(k), if that happens, you could get out of the fund with no cost.
Wiki David Grabiner

Topic Author
Koichiro
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Re: Two Choices for Emerging Market Index Fund: Fidelity Advantage FPMAX vs Vanguard Admiral VEMAX

Post by Koichiro » Sun Feb 21, 2016 4:37 pm

Thanks for the reply, and thoughts re tax efficiency. I basically have more than enough space in my tax-advantaged space for all the obvious choices (REITS, TIPS, corporate bonds etc.), so I can put some emerging market stuff there too without causing any bad displacement to taxable accounts.

Regarding what indices they are tracking: I thought that they both track the FTSE Emerging Index, which appears to be transitioning to the FTSE Emerging Markets All Cap China A Inclusion Index:
http://www.ftse.com/Vanguard/Home/Indic ... d=VALIANT2

However, the Fidelity FPMAX site still describes itself as tracking "FTSE Emerging" whereas the Vanguard says "FTSE Emerging Markets All Cap China A Inclusion Index".

Am I correct in understanding that these will be the same index eventually?

Thanks!

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Blimpalot
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Re: Two Choices for Emerging Market Fund: FPMAX vs VEMAX

Post by Blimpalot » Wed Feb 13, 2019 12:07 pm

Does anyone know what happened to FPMAX (Fidelity Emerging Markets index fund)? I hold shares of it in my 401(k) and I noticed a while back that the price as reflected on my iPhone's stock page was remaining steady at 9.79. I thought it was just a glitch in the stock tracker on my phone. I went to look up the price today and there is no such thing anymore. Apparently, all the shares I thought I had in FPMAX are now showing up in my 401(k) as FPADX. I did a quick Google search and could find nothing on the switch. A number of pages that come up when searching for FPMAX now give 404 error messages.

Is FPADX basically the same fund, just a different class that I got put into without anyone telling me? If that were the case, I would think FPMAX would still exist and I'd be able to find info on it (like when one hits the Admiral class level at Vanguard, say in VTSAX--VTSMX still exists). I just find it strange that my holdings changed and no one told me about the change or what caused it.
"Nothing I see can be taken from me."--Tom Marshall

MikeMak27
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Re: Two Choices for Emerging Market Fund: FPMAX vs VEMAX

Post by MikeMak27 » Wed Feb 13, 2019 12:12 pm

Fidelity merged all of its classes of index funds into one, the lowest cost institutional shares. Fpmax is now fpadx and it’s the exact same thing with a lower expense ratio. A true win win for all!
Mak 3 fund portfolio: 50% US small cap value & US Small cap (IJS, IJR), 40% Emerging Markets (IEMG, VWO, FPADX), 10% US REIT (VNQ)

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Blimpalot
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Re: Two Choices for Emerging Market Fund: FPMAX vs VEMAX

Post by Blimpalot » Wed Feb 13, 2019 12:17 pm

MikeMak27 wrote:
Wed Feb 13, 2019 12:12 pm
Fidelity merged all of its classes of index funds into one, the lowest cost institutional shares. Fpmax is now fpadx and it’s the exact same thing with a lower expense ratio. A true win win for all!
Thanks! I figured that was it, but also knew that someone here would know faster than I was able to find the answer from the great Google machine.
"Nothing I see can be taken from me."--Tom Marshall

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Wiggums
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Re: Two Choices for Emerging Market Fund: FPMAX vs VEMAX

Post by Wiggums » Wed Feb 13, 2019 1:12 pm

MikeMak27 wrote:
Wed Feb 13, 2019 12:12 pm
Fidelity merged all of its classes of index funds into one, the lowest cost institutional shares. Fpmax is now fpadx and it’s the exact same thing with a lower expense ratio. A true win win for all!
+1

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jhfenton
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Re: Two Choices for Emerging Market Fund: FPMAX vs VEMAX

Post by jhfenton » Wed Feb 13, 2019 1:58 pm

I have my entire Fidelity HSA invested in FPADX. It's hard to beat it at 8 bp.

One interesting change reading through the old posts is that FPADX now follows an MSCI emerging markets index. MSCI still considers South Korea an emerging market, so you get a chunk (13%) of South Korean equities in FPADX along with a bit less China.

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