Fido reduces 529 fees - very competitive

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nyblitz
Posts: 354
Joined: Mon Apr 09, 2007 7:33 am

Fido reduces 529 fees - very competitive

Post by nyblitz » Thu Jul 07, 2016 10:09 am

Greetings,

Just happened to be rechecking various 529 expenses (looking to fund a new account recently) and found Fidelity has significantly cut their expenses.

Didn't see it discussed here and searched and found:

http://www.businesswire.com/news/home/2 ... ege-Saving

The total market fund appears to be equal to Cali's Scholarshare fund (0.11).

Their international fund appears to be developed only, but still very competitive at 0.14 er.

Also has an intermediate treasury fund, for those who prefer treasuries only in their bonds.

Looks like good news for parents and their future scholars.

Have a great day everyone!

harikaried
Posts: 1241
Joined: Fri Mar 09, 2012 3:47 pm

Re: Fido reduces 529 fees - very competitive

Post by harikaried » Thu Jul 07, 2016 11:14 am

Nice! We have the 529s invested in just Total Market Index where the overall expenses used to be 0.19%.

According to the Investment expenses section as of 7/1/2016:
https://www.fidelity.com/new-hampshire- ... view.shtml

Total Market Index Portfolio
Estimated Underlying Fund Expenses 0.02%
Program Manager Fee 0.04%
State Fee 0.05%
Total Annual Asset-Based Fee 0.11%

The expense ratio went down by 8 basis points for us. I believe the program manager and state fees are unchanged, so Fidelity is cutting it from the underlying fund expenses. Previously, it used the expense ratio of the Investor class (0.10% before July 1), and now it looks to use the new Institutional Premium class (0.015%) expense ratio. Checking the International Index with 0.05% expense ratio matches up with the new Institutional Premium cost. Perhaps the actual fee for Total Market Index in the 529 is 0.105%.
Last edited by harikaried on Thu Jul 07, 2016 11:18 am, edited 1 time in total.

mikep
Posts: 3697
Joined: Wed Apr 22, 2009 9:27 pm

Re: Fido reduces 529 fees - very competitive

Post by mikep » Thu Jul 07, 2016 11:17 am

I have avoided these before since they hold commodities. Has that changed?

mervinj7
Posts: 625
Joined: Thu Mar 27, 2014 3:10 pm

Re: Fido reduces 529 fees - very competitive

Post by mervinj7 » Thu Jul 07, 2016 11:20 am

That's fantastic news! It looks like they are very competitive with both NY's and CA's 529 (my two preferred ones). For those that already have accounts at Fidelity and don't get in-state tax deductions, its a great option.
mikep wrote:I have avoided these before since they hold commodities. Has that changed?
As of 1/26/2016, the age-based portfolios still hold around ~1.2% in commodities. Does that really matter?
http://personal.fidelity.com/accounts/p ... ations.pdf

nyblitz
Posts: 354
Joined: Mon Apr 09, 2007 7:33 am

Re: Fido reduces 529 fees - very competitive

Post by nyblitz » Thu Jul 07, 2016 11:26 am

Mikep,

Some do (I think), but you can select individual portfolios to hold fidelity index funds. Total stock, international stock, the 500 index, a money market, and treasuries. At least that's what I've seen so far.

That's what I will do in the next week or so.

I only briefly looked at the multi asset portfolios and saw they were complex and expensive, and my eyes zeroed in on the single class, static, index only options.

Harikaried,

It looks like you are spot on about the change in class to account for the fee drop. It looks like you selected the NH program (Unique) as that was included in your linked post. If so, why did you select NH over the other 3 states?

mikep
Posts: 3697
Joined: Wed Apr 22, 2009 9:27 pm

Re: Fido reduces 529 fees - very competitive

Post by mikep » Thu Jul 07, 2016 11:37 am

mervinj7 wrote:That's fantastic news! It looks like they are very competitive with both NY's and CA's 529 (my two preferred ones). For those that already have accounts at Fidelity and don't get in-state tax deductions, its a great option.
mikep wrote:I have avoided these before since they hold commodities. Has that changed?
As of 1/26/2016, the age-based portfolios still hold around ~1.2% in commodities. Does that really matter?
http://personal.fidelity.com/accounts/p ... ations.pdf
I remember it being around 3% earlier. Why is it 1.2% now? Can it be 3% or more later? How often do they tinker with it?

TheGipper
Posts: 277
Joined: Fri Jun 26, 2015 9:52 am

Re: Fido reduces 529 fees - very competitive

Post by TheGipper » Thu Jul 07, 2016 11:44 am

Good timing for me. I was about to transfer from MA Fidelity index 529 to UT 529, but now I think I'll stay put. The avg ER including funds, manager fee, and state fee for my 4 kids age-based target date funds is .122%, better than NY, significantly better than UT. Does this make MA Fidelity index now the lowest cost index target date option?

I prefer to be much more stock heavy than the Fidelity age appropriate glidepaths so I have just temporarily shifted about half of the funds into my youngest child's account with a 2033 target date. I'll shift back to the oldest as needed when their target date approaches.

mervinj7
Posts: 625
Joined: Thu Mar 27, 2014 3:10 pm

Re: Fido reduces 529 fees - very competitive

Post by mervinj7 » Thu Jul 07, 2016 11:45 am

mikep wrote: I remember it being around 3% earlier. Why is it 1.2% now? Can it be 3% or more later? How often do they tinker with it?
I wasn't aware that they tinker with it often. If it matters, why not invest in the individual funds instead (e.g. total market, international, bond)? That's what we were originally planning to do but now that the Fidelity 2033 age-based portfolios is only 0.12%, it's hard to justify the extra effort to split up the assets.

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