Re: Fidelity competing harder w/Vanguard
Posted: Mon Aug 29, 2016 2:05 pm
Schwab makes the same type of comparisons:
http://www.schwab.com/public/schwab/inv ... index_etfs
http://www.schwab.com/public/schwab/inv ... index_etfs
Investing Advice Inspired by Jack Bogle
https://www.bogleheads.org/forum/
https://www.bogleheads.org/forum/viewtopic.php?f=10&t=198320
Oh. I don't use Fidelity and am not familiar with their portfolio rebalance tool. But I can't imagine their tool won't work for their funds.unius_legionis wrote:The ones quoted in the link provided by the OP but specifically these:retiredjg wrote:Which funds?unius_legionis wrote:Is Fidelity's portfolio rebalance tool available for these funds?
Fidelity® Total Market Index Premium ( FSTVX )
Fidelity® Total Intl Index Premium ( FTIPX )
Fidelity® US Bond Index Premium ( FSITX )
Schwab still does not offer a competing intermediate-term bond index fund or ETF.DaftInvestor wrote:Schwab makes the same type of comparisons:
http://www.schwab.com/public/schwab/inv ... index_etfs
This is generally true but you just have to have a little narrower focus when using Fidelity because their costs are a little higher around the rest of their portfolio. I am glad to see they finally reduced their extremely ridiculous $75 transaction cost to trade no-load non-fidelity mutual funds to an only slightly ridiculous $50, which I think is still probably double the cost I could buy a non-Vanguard Mutual fund from my Vanguard account.SavageAmusement wrote:Fidelity and Vanguard are both great companies. It's hard to go wrong with either one of them. Any difference between the two will be dwarfed by your personal asset allocation decisions.
FinancialDave wrote:...which I think is still probably double the cost I could buy a non-Vanguard Mutual fund from my Vanguard account.
Fidelity wins the fee game (in a negative way) since the $50 front end transaction cost compounds against you for the whole investment period, while the Vanguard fee is only $20 (at least for me) on the front end. If you held the fund for 20 years that $30 differential compounds to $200 after 20 years (10% growth rate), so when you compare that to the back end $20 transaction charge it dwarfs the Vanguard fees 10 to 1 over the 20 year period.Doc wrote:FinancialDave wrote:...which I think is still probably double the cost I could buy a non-Vanguard Mutual fund from my Vanguard account.
I think Vg charges on buy & sell but Fido only on the buy.
This, +1000.White Coat Investor wrote:The problem with this argument is that if Vanguard had never existed, you wouldn't be able to be a Boglehead at Fidelity. Fidelity's low cost index funds are a direct result of their need to compete with Vanguard. No Vanguard= No Need to have low cost index funds.akpk wrote:very well saidSpirit Rider wrote: You do not need to use Vanguard to be a Boglehead.
So whether you do your Bogleheading at Vanguard, Fidelity, Schwab, or iShares, you have Jack Bogle and Vanguard to thank for the ability to do it.
What's going on with the 1 year 500 index number?Angst wrote:
I think small caps are still negative on 1 year perfomance, hence the lower number for total market returns?retiredjg wrote:What's going on with the 1 year 500 index number?Angst wrote:
Why would you be buying non-Fidelity funds at Fidelity or non-Vanguard funds at Vanguard? They could charge $1,000,000 for such a transaction; irrelevant fee is irrelevant.FinancialDave wrote:Fidelity wins the fee game (in a negative way) since the $50 front end transaction cost compounds against you for the whole investment period, while the Vanguard fee is only $20 (at least for me) on the front end. If you held the fund for 20 years that $30 differential compounds to $200 after 20 years (10% growth rate), so when you compare that to the back end $20 transaction charge it dwarfs the Vanguard fees 10 to 1 over the 20 year period.Doc wrote:FinancialDave wrote:...which I think is still probably double the cost I could buy a non-Vanguard Mutual fund from my Vanguard account.
I think Vg charges on buy & sell but Fido only on the buy.
Dave
Excellent point, the microscopic difference in expense ratio (0.005%) is outweighed by better performance at Vanguard.Angst wrote:Good for Fidelity, and good for the industry. But as far as my Vanguard VTI holdings go... this new ER is pretty much a yawn. I suggest one forget the minuscule difference in ER's and consider the bottom line, i.e. the funds' performance:
Fidelity's ER could be 0.00% and it still looks like Vanguard would beat its performance.
I still want to know why the Vanguard index funds are performing better. Better trading? Lower historic fees? Fidelity has some weird hidden way of pumping money out of its index funds? I've read over both annual reports and haven't found anything.ruralavalon wrote:Excellent point, the microscopic difference in expense ratio (0.005%) is outweighed by better performance at Vanguard.Angst wrote:Good for Fidelity, and good for the industry. But as far as my Vanguard VTI holdings go... this new ER is pretty much a yawn. I suggest one forget the minuscule difference in ER's and consider the bottom line, i.e. the funds' performance:
Fidelity's ER could be 0.00% and it still looks like Vanguard would beat its performance.
The microscopic difference in expense ratio is for marketing purposes at Fidelity.
They both use the same indexes (for a number of the funds). They both reinvest the securities lending (and Fidelity reinvests more). Fidelity has a lower ER (at least on some funds). And yet with all that Vanguard still consistently puts more money into their investors' pockets.backpacker wrote:I still want to know why the Vanguard index funds are performing better. Better trading? Lower historic fees? Fidelity has some weird hidden way of pumping money out of its index funds? I've read over both annual reports and haven't found anything. Yet.ruralavalon wrote:Excellent point, the microscopic difference in expense ratio (0.005%) is outweighed by better performance at Vanguard.Angst wrote:Good for Fidelity, and good for the industry. But as far as my Vanguard VTI holdings go... this new ER is pretty much a yawn. I suggest one forget the minuscule difference in ER's and consider the bottom line, i.e. the funds' performance:
Fidelity's ER could be 0.00% and it still looks like Vanguard would beat its performance.
The microscopic difference in expense ratio is for marketing purposes at Fidelity.
You are investing in the market. Fidelity is part of the market. If you don't belive in Fidelity you shouldn't belive in the market and shouldn't be investing in the market at all. Just buy US Treasuries and then rely on the politicians and the Fed instead?lemonPepper wrote:honest question from somebody in the early accumulation phase: should I trust fidelity to not play games over my 50 year investing life? will they bait and switch on me?
They won't "anything" you if you use them as simply a house to store, buy, sell and research investments of your choosing. I have been with Fidelity forever, Vanguard for about a year and just opened my first ever taxable account today at Schwab. I have received the "I'm your account manager, is there anything I can help you with?" call. No sales, no hard sell. They all do exactly the same thing in my book. I follow the lowest ER ...period.lemonPepper wrote:honest question from somebody in the early accumulation phase: should I trust fidelity to not play games over my 50 year investing life? will they bait and switch on me?
well.. what I meant was for some reason I trust vanguard. I haven't' developed that trust with fidelity, even though they have lowER ER for some funds. My guess is they are doing this to get some money in and when they have enough, they will raise the expense ratio and many people won't notice it. It wouldn't be the first time a financial institution pulls a fast one on you..Doc wrote:You are investing in the market. Fidelity is part of the market. If you don't belive in Fidelity you shouldn't belive in the market and shouldn't be investing in the market at all. Just buy US Treasuries and then rely on the politicians and the Fed instead?lemonPepper wrote:honest question from somebody in the early accumulation phase: should I trust fidelity to not play games over my 50 year investing life? will they bait and switch on me?
My 30 years of experience with Fidelity has shown them to be an honorable and trustworthy organization. Their customer service is second to none. Vanguard is also a great company. Some people like vanilla ice cream and some like chocolate. It all depends on your taste. You've got two terrific choices.lemonPepper wrote:
well.. what I meant was for some reason I trust vanguard. I haven't' developed that trust with fidelity, even though they have lowER ER for some funds. My guess is they are doing this to get some money in and when they have enough, they will raise the expense ratio and many people won't notice it. It wouldn't be the first time a financial institution pulls a fast one on you..
So you are not going to invest in any firm in the financial sector?lemonPepper wrote:well.. what I meant was for some reason I trust vanguard. I haven't' developed that trust with fidelity, even though they have lowER ER for some funds. My guess is they are doing this to get some money in and when they have enough, they will raise the expense ratio and many people won't notice it. It wouldn't be the first time a financial institution pulls a fast one on you..Doc wrote:You are investing in the market. Fidelity is part of the market. If you don't belive in Fidelity you shouldn't belive in the market and shouldn't be investing in the market at all. Just buy US Treasuries and then rely on the politicians and the Fed instead?lemonPepper wrote:honest question from somebody in the early accumulation phase: should I trust fidelity to not play games over my 50 year investing life? will they bait and switch on me?
Believe it or not, not everyone buys only index funds, and puts all their money into one fund company, but they may want to consolidate all their investments at one site such as Fidelity or Vanguard.TOJ wrote:Why would you be buying non-Fidelity funds at Fidelity or non-Vanguard funds at Vanguard? They could charge $1,000,000 for such a transaction; irrelevant fee is irrelevant.FinancialDave wrote:Fidelity wins the fee game (in a negative way) since the $50 front end transaction cost compounds against you for the whole investment period, while the Vanguard fee is only $20 (at least for me) on the front end. If you held the fund for 20 years that $30 differential compounds to $200 after 20 years (10% growth rate), so when you compare that to the back end $20 transaction charge it dwarfs the Vanguard fees 10 to 1 over the 20 year period.Doc wrote:FinancialDave wrote:...which I think is still probably double the cost I could buy a non-Vanguard Mutual fund from my Vanguard account.
I think Vg charges on buy & sell but Fido only on the buy.
Dave
One, Vanguard is structured as to not have loss leaders.Doc wrote:So you are not going to invest in any firm in the financial sector?lemonPepper wrote:well.. what I meant was for some reason I trust vanguard. I haven't' developed that trust with fidelity, even though they have lowER ER for some funds. My guess is they are doing this to get some money in and when they have enough, they will raise the expense ratio and many people won't notice it. It wouldn't be the first time a financial institution pulls a fast one on you..Doc wrote:You are investing in the market. Fidelity is part of the market. If you don't belive in Fidelity you shouldn't belive in the market and shouldn't be investing in the market at all. Just buy US Treasuries and then rely on the politicians and the Fed instead?lemonPepper wrote:honest question from somebody in the early accumulation phase: should I trust fidelity to not play games over my 50 year investing life? will they bait and switch on me?![]()
My local supermarket has lost leaders every week and they will be different next week. So I should stop shopping there and go to a store with stable prices but poor customer service?
TANSTAFL
Agreed, In our thirtyish years of experience Fidelity and Vanguard are both honorable and trustworthy. IMHO, Fidelity's website and customer service is worth a few basis points; maybe someday competition will force Vanguard into spending money on those same backroom expenditures thus raising their fixed costs. We own decent amounts of parallel index funds at both houses and after years the differences expressed as dollars wouldn't buy us a dinner at a good restaurant. In our case good beats fussing around looking for perfection.SavageAmusement wrote:My 30 years of experience with Fidelity has shown them to be an honorable and trustworthy organization. Their customer service is second to none. Vanguard is also a great company. Some people like vanilla ice cream and some like chocolate. It all depends on your taste. You've got two terrific choices.lemonPepper wrote:
well.. what I meant was for some reason I trust vanguard. I haven't' developed that trust with fidelity, even though they have lowER ER for some funds. My guess is they are doing this to get some money in and when they have enough, they will raise the expense ratio and many people won't notice it. It wouldn't be the first time a financial institution pulls a fast one on you..
There's a difference between being an owner of a company (investing in the market) and being a customer of a company (in this case, Fidelity).Doc wrote:You are investing in the market. Fidelity is part of the market. If you don't belive in Fidelity you shouldn't belive in the market and shouldn't be investing in the market at all. Just buy US Treasuries and then rely on the politicians and the Fed instead?lemonPepper wrote:honest question from somebody in the early accumulation phase: should I trust fidelity to not play games over my 50 year investing life? will they bait and switch on me?
I don't know either way, and as a privately held company how can you know if your name isn't Johnson?Jack FFR1846 wrote:I don't believe for a second that Fidelity (or Schwab or TDAmeritrade) use low cost index funds just as loss leaders.
As a quick look I just looked up Schwab's S&P 500 fund on their site. The gross expense ratio is 0.11% and the net expense ratio is 0.09%. I call that 0.02% difference a loss leader. It doesn't mean diddly but it lets them say we are lower cost than xyz.Jack FFR1846 wrote:I don't believe for a second that Fidelity (or Schwab or TDAmeritrade) use low cost index funds just as loss leaders.
I've never understood this point about Vanguard's website. Sure, it's not the slickest one out there, but I'm on it once or twice a year for ten minutes. Snazzy website for 20 minutes a year can't be worth more than about $2.AllieTB1323 wrote: IMHO, Fidelity's website ... is worth a few basis points.
I second this. I'll just use Vanguard's website when I hit my rebalancing band or I contribute to our Roth IRA's.backpacker wrote:I've never understood this point about Vanguard's website. Sure, it's not the slickest one out there, but I'm on it once or twice a year for ten minutes. Snazzy website for 20 minutes a year can't be worth more than about $2.AllieTB1323 wrote: IMHO, Fidelity's website ... is worth a few basis points.
If anything, a snazzy website would only encourage me to check my accounts more.
toto238 wrote:When I want to buy groceries cheap, I go to Walmart. It's entirely possible that Target may have one of the products I'm shopping for at a slightly cheaper price, but I still don't go there. I go to Walmart because I know no matter what product I buy, it will be at a very low price and possibly even the lowest price in the market.
In the same way, I know shopping for investments at Vanguard no matter what product I purchase I know it will be one of the cheapest funds for its category, possible the cheapest fund (as measured by ER). While I may be able to spend a lot of time and effort maintaining accounts at 7 different institutions to minimize expenses even further, the $10-20 per year in expenses it may save me isn't really worth the 100 hours a year it would take to maintain it all.
If you have $100,000 invested, then 0.01% (or one basis point) is $10 per year. If I had $10,000,000 invested it would be $1,000 a year and maybe would be worth hunting for that extra basis point. If I'm managing assets of $10,000,000,000 then each basis point is $1million I'm saving my clients collectively when I cut expenses. That's when it really starts to matter.
So when I talk about time commitment, it's not just rebalancing. It's also the time you spend dealing with any administrative whatnot. It's how much junkmail I get. It's how much time it takes me to aggregate the data from all the different websites to figure out what my actual performance was for the year. It's how many places I have to call to change my address or phone number whenever there's an update. It's how many places I have to update the info on Mint on a regular basis.Jack FFR1846 wrote:toto238 wrote:When I want to buy groceries cheap, I go to Walmart. It's entirely possible that Target may have one of the products I'm shopping for at a slightly cheaper price, but I still don't go there. I go to Walmart because I know no matter what product I buy, it will be at a very low price and possibly even the lowest price in the market.
In the same way, I know shopping for investments at Vanguard no matter what product I purchase I know it will be one of the cheapest funds for its category, possible the cheapest fund (as measured by ER). While I may be able to spend a lot of time and effort maintaining accounts at 7 different institutions to minimize expenses even further, the $10-20 per year in expenses it may save me isn't really worth the 100 hours a year it would take to maintain it all.
If you have $100,000 invested, then 0.01% (or one basis point) is $10 per year. If I had $10,000,000 invested it would be $1,000 a year and maybe would be worth hunting for that extra basis point. If I'm managing assets of $10,000,000,000 then each basis point is $1million I'm saving my clients collectively when I cut expenses. That's when it really starts to matter.
If you buy a ton of different funds and don't want to be bothered with checking the ER, then I see your point. I do look and I look very hard. I only do a 3 fund portfolio and track it on an excel spreadsheet, which is extremely easy. I built the sheet myself and it tells me ER, cost per year of each fund, total cost, and asset allocations in a number of ways. I spend 15 minutes a year rebalancing.
I understand that not everyone is laser focused on costs. I thought that was what Bogleheads all did, but ok. My box that tells me total cost per year is very important to me and you know what? When I see that one of my funds has just cut its ER, I'm very happy to update the spreadsheet and see how much less I'm paying. You know....."you get what you don't pay for", right?
I do have money at Vanguard. ....and Fidelity and soon with Schwab. Yes, I do chase ERs. Back when I had a mortgage, I did a no cost refi to save $12 a month, so I've always chased the last penny. You don't have to do that, certainly, but it's sort of ingrained in me.
Sure, free money is free money. I'd not switch fund families for $50 per year per million invested however. I do watch fees, and in fact dropped Lifestrategy fund (0.15% fee) for 3 Admiral fund equivalent without int'l bond (0.07% fee), though there were other reasons too.ruralavalon wrote:A difference of 0.01% or 0.005% in expense ratio of a fund has no material impact on portfolio performance, and is likely swamped by other factors. Still I feel great whenever they slice another 0.01% off the expense ratio of any fund we use.
If you're laser focused on costs, why have money at Fidelity and Schwab? Their funds cost more, not less.*Jack FFR1846 wrote:I understand that not everyone is laser focused on costs. I thought that was what Bogleheads all did, but ok. My box that tells me total cost per year is very important to me and you know what? When I see that one of my funds has just cut its ER, I'm very happy to update the spreadsheet and see how much less I'm paying. You know....."you get what you don't pay for", right?
I do have money at Vanguard. ....and Fidelity and soon with Schwab. Yes, I do chase ERs.
Huh?*3!4!/5! wrote:It looks like
FPMAX has Lg:Md:Sm at 91:9:0
whereas
VEMAX has Lg:Md:Sm at 81:15:4
so the Fidelity fund is missing the smallest 10% of the market. Seems like they are cutting corners, and fudging the "fund equivalence".
On their websiteDoc wrote:Huh?*3!4!/5! wrote:It looks like
FPMAX has Lg:Md:Sm at 91:9:0
whereas
VEMAX has Lg:Md:Sm at 81:15:4
so the Fidelity fund is missing the smallest 10% of the market. Seems like they are cutting corners, and fudging the "fund equivalence".
They follow different indexes FPMAX=MSCI EM Lrg/Mid and VEMAX=FTSE EM AC CHN A Inc ...
*3!4!/5! wrote: On their website
https://www.fidelity.com/mutual-funds/i ... ndex-funds
they directly equate these funds side-by-side and tout their 1bp cost advantage. But their 1bp discount is just for something similar, not the same.
https://www.fidelity.com/mutual-funds/i ... ndex-fundsFidelity wrote:Who has lower expenses in index investing?
In a head-to-head comparison of our 27 stock and bond index mutual funds and sector exchange-traded funds (ETFs) with comparable offerings from Vanguard: