Fidelity Files for Four Fidelity ZERO℠ Funds (0.00% ER)

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TIAX
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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by TIAX » Wed Aug 01, 2018 4:00 pm

Nate79 wrote:
Wed Aug 01, 2018 3:18 pm
TIAX wrote:
Wed Aug 01, 2018 3:06 pm
Nate79 wrote:
Wed Aug 01, 2018 11:17 am
TIAX wrote:
Wed Aug 01, 2018 10:22 am
Interesting. Was this in response to Vanguard's announcement of 1,800 commission-free ETFs? Here's an article on the Fidelity zero funds. Also from the article:
Significantly reduced and simplified pricing on existing Fidelity index mutual funds . . . With this action, 100 percent of Fidelity’s stock and bond index mutual funds and sector ETFs will have total net expenses lower than all of Vanguard’s comparable funds that are available to individuals, advisors and institutional investors.
The article also notes $0 fees including wire fees.

As the prospectus notes, one of the principal investment strategies is "Lending securities to earn income for the fund." And since the Fidelity TSM fund earns between 4 and 5 bp from securities lending, this is nothing more than marketing.
My understanding is that Lending security income is not included in ER. If these funds have a quoted 0% ER then you would add on top of that the income earned from securities lending giving these funds a negative ER.
Right, my point is it appears that these Fidelity funds (unlike their other funds) will keep all the security lending revenue.
Not according to the SEC filing. Where did you get this idea?
Perhaps you're right, I assumed because the prospectus did not state any of the security lending revenue was going to the investors, none of it was. Do we know what the % will be?

Therapist Investor
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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by Therapist Investor » Wed Aug 01, 2018 4:13 pm

I just realized something interesting after checking their site. There is now no difference in ER on many of Fidelity's funds with respect to investor class or premium class. Also, many minimums to invest are now $0.

Just wanted to confirm: will the zero ER index funds only be available in taxable brokerage accounts or will they also be available to invest in through retirement accounts?
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eltron
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Fidelity no cost index fund

Post by eltron » Wed Aug 01, 2018 4:15 pm

[merged into existing thread - moderator prudent]

https://www.cnbc.com/2018/08/01/fidelit ... -fund.html

Thoughts on this? I'd have to assume Vanguard will follow in short order, no?

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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by G-Force » Wed Aug 01, 2018 4:18 pm

bosocal wrote:
Wed Aug 01, 2018 3:17 pm
They are going to be phasing out the investor and premium classes and just combining them into one MF.
Did they say when this is going to happen?

bosocal
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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by bosocal » Wed Aug 01, 2018 4:22 pm

G-Force wrote:
Wed Aug 01, 2018 4:18 pm
bosocal wrote:
Wed Aug 01, 2018 3:17 pm
They are going to be phasing out the investor and premium classes and just combining them into one MF.
Did they say when this is going to happen?
No they didn't say exactly. They just said they would be rolling them out soon.

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arcticpineapplecorp.
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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by arcticpineapplecorp. » Wed Aug 01, 2018 4:25 pm

G-Force wrote:
Wed Aug 01, 2018 4:18 pm
bosocal wrote:
Wed Aug 01, 2018 3:17 pm
They are going to be phasing out the investor and premium classes and just combining them into one MF.
Did they say when this is going to happen?
This page (https://www.fidelity.com/why-fidelity/pricing-fees) says 8/3/18 with the following footnote:
3. Fidelity offers two index funds with a zero expense ratios. Both seek to track Fidelity created indexes, one comprising publicly traded companies in the U.S., and the other developed and emerging international companies. Shares of funds are generally available only to individual retail investors who purchase their shares through a Fidelity brokerage account.
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Re: Fidelity no cost index fund

Post by lostdog » Wed Aug 01, 2018 4:25 pm

eltron wrote:
Wed Aug 01, 2018 4:15 pm
[merged into existing thread - moderator prudent]

https://www.cnbc.com/2018/08/01/fidelit ... -fund.html

Thoughts on this? I'd have to assume Vanguard will follow in short order, no?
Will sit tight for a few months and see how Vanguard responds. This is good for all investors.
I don't invest looking in the rear view mirror and I know absolutely nothing about the future. I invest in Vanguard Total World Stock Index.

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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by mickeyd » Wed Aug 01, 2018 4:28 pm

Meaty wrote:
Wed Aug 01, 2018 11:54 am
Any indication when Vanguard will follow suit? It’s a pain to transfer companies but this would be worth it
I don't believe that VG uses loss-leaders or subsidizes funds as other MF companies do. The VG ER is truly what the cost to run the fund is. It's that simple.

The Johnson family is rich and can afford it. VG does not wish to burden the other investors with such non-sense.
Last edited by mickeyd on Wed Aug 01, 2018 4:30 pm, edited 2 times in total.
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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by manuvns » Wed Aug 01, 2018 4:28 pm

er doesn't matter, ETF are better due to option/ covered calls can pay for expense .

EdLaFave
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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by EdLaFave » Wed Aug 01, 2018 4:31 pm

I'm reading claims that the revenue generated from security lending is added back to the fund under the banner of "performance" rather than being subtracted from the expense ratio.

If this result is significant enough to warrant discussion then why does Vanguard's 500 Index Admiral fund (expense ratio 0.04%) consistently lag the S&P 500? YTD it is lagging by 0.03% and last year it lagged by 0.04%.

By glancing at that data it would seem the impact on additional performance is negligible OR the savings is being subtracted from the expense ratio. Is there a link that explicitly says how the revenue from security lending is applied to the fund?

http://performance.morningstar.com/fund ... ture=en_US
Last edited by EdLaFave on Wed Aug 01, 2018 4:33 pm, edited 1 time in total.

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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by MnD » Wed Aug 01, 2018 4:33 pm

rgs92 wrote:
Wed Aug 01, 2018 1:17 pm
I bet Schwab will follow with zero-ER ETFs. Race to the bottom here.
This is like my supermarket that always has bananas at 49 cents a pound.
It's a loss leader hoping to get you to buy higher priced products, or (God Forbid) Advisory Services and AUM fees.
The financial "supermarkets" can price their core index funds and/or ETF's at zero because they sell many other things that aren't loss-leaders.
For example Schwab Prime Money Market now yields 1.88% versus VG Prime MM at 2.06% due to higher expenses of .35% versus .16%.

All-around I think this race to the bottom on index fund expenses is a great thing because effectively if you are price-conscious in investing "other people" pay for the good stuff that Schwab and Fidelity have to offer and I doubt Vanguard is going to go out of business over this. :mrgreen:
Last edited by MnD on Wed Aug 01, 2018 4:35 pm, edited 1 time in total.

Angst
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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by Angst » Wed Aug 01, 2018 4:34 pm

MrBeaver wrote:
Wed Aug 01, 2018 3:12 pm
It seems what is lost in all the securities lending talk is that perhaps to compare true cost, one should look at "net ER + returned lending revenue"?

If Fidelity charges 0% ER but returns 2 basis points of lending revenue to shareholders, while Vanguard charges 0.04% ER (4 basis points) and returns 7 basis points of lending revenue to shareholders, Vanguard is a better deal, right? What are the actual numbers here to do a comparison?
Exactly, at least in principle. And I might append your first sentence: "+ cap gains minimization + tracking".
Vanguard's combined ETF/Mutual Fund structure is an advantage.

I find it almost comical how some people posting in this thread are so single-mindedly focused on ER. Of course it's huge what Fidelity's doing here, but in the end, I easily expect to prefer, i.e. do better with something like a Vanguard TSM 0.04 ER vs. a Fidelity TSM 0.00 ER.

[Edit] Now, as I've said before... with these minuscule ERs and performance differences at the margin, I would likely be swayed by a fund company that was able to provide a web platform that was easily and extensively user-customizable, accurate and reliable.
Last edited by Angst on Wed Aug 01, 2018 4:48 pm, edited 2 times in total.

johnanglemen
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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by johnanglemen » Wed Aug 01, 2018 4:39 pm

It seems like there's some emotionally-driven debate happening here. Personally I'd like to take all emotion out of the equation and make a purely rational decision. If Fidelity is truly cheaper then I would switch new purchases immediately.

The outstanding questions seem to be:

* Securities lending revenue. Some people are saying that Vanguard shares more of the revenue with investors than Fidelity, while others disagree. How can we get the definitive answer?

* Taxes. This hasn't been discussed much, but Fidelity index funds have distributed capital gains, whereas Vanguard's haven't (in a long time anyway). Thoughts on this?

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munemaker
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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by munemaker » Wed Aug 01, 2018 4:42 pm

I can picture those Charles Schwab guys in their high-story office, looking over at Fidelity, saying "What are those guys up to now?"

I wonder if Charles Schwab will make a bold move like Vanguard or Fidelity, or if they will follow suit on what has already been done by the competition?

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munemaker
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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by munemaker » Wed Aug 01, 2018 4:44 pm

Socal77 wrote:
Wed Aug 01, 2018 12:42 pm
rgs92 wrote:
Wed Aug 01, 2018 12:34 pm
I wish they would also have this for a total bond market fund.
I also wish they would have one for a balanced index fund that is not a target fund. (Or at least with an ER under 5 basis points. They have no such fund. 4-in-1 has too high a stock allocation to qualify.)
Ditto
With fixed income, you always have the option to buy Treasuries and CDs (a la Larry Swedroe) with no fees instead of buying a bond fund. So you can escape the fund fees totally.

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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by johnanglemen » Wed Aug 01, 2018 4:47 pm

Answer on securities lending:
But Fidelity pushed back on the talk of revenue from securities lending. "Fidelity's securities lending program is designed to benefit fund shareholders," the company said in a statement. "Fidelity is not receiving any revenue from the Fidelity ZERO Index funds for securities lending. Nor is Fidelity currently receiving any portion of the income that is generated from securities lent out."
(http://www.investmentnews.com/article/2 ... ndex-funds)

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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by triceratop » Wed Aug 01, 2018 4:50 pm

I am enjoying the use of present participle tense immensely.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

eltron
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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by eltron » Wed Aug 01, 2018 4:57 pm

Sort of a side note, but I have my solo 401k with Fidelity and my taxable with Vanguard. The reason for that is that I had always read that Vanguard (VTSAX specifically) was the most tax efficient fund and was great for taxable accounts.

Does anyone know if it would be wiser to continue with VTSAX for it's tax efficiency or move it to one of these new Fidelity zero cost index funds? Just curious of the zero ER would offset the less tax efficiency or not.

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corn18
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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by corn18 » Wed Aug 01, 2018 4:58 pm

"Fidelity said the fee changes will save shareholders approximately $47 million annually."

"In 2017, Boston-based Fidelity reported $18.2 billion in revenue, up 14% from the prior year, and $5.3 billion in operating income, a 54% year-over-year increase, it said in its annual report to shareholders"

$47M / $5,300M = 0.8%

Drop in the bucket.
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Meaty
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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by Meaty » Wed Aug 01, 2018 5:01 pm

mickeyd wrote:
Wed Aug 01, 2018 4:28 pm
Meaty wrote:
Wed Aug 01, 2018 11:54 am
Any indication when Vanguard will follow suit? It’s a pain to transfer companies but this would be worth it
I don't believe that VG uses loss-leaders or subsidizes funds as other MF companies do. The VG ER is truly what the cost to run the fund is. It's that simple.

The Johnson family is rich and can afford it. VG does not wish to burden the other investors with such non-sense.
Thanks for the info. So a dumb question on my part - why would I stay with VG if I’m looking for only total stock market at the lowest cost?
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johnanglemen
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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by johnanglemen » Wed Aug 01, 2018 5:10 pm

triceratop wrote:
Wed Aug 01, 2018 4:50 pm
I am enjoying the use of present participle tense immensely.
Vanguard is not currently receiving any securities lending either... Neither company has made an ironclad commitment. Vanguard has raised ratios and fees in the past. Not seeing a difference here.

baliktad
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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by baliktad » Wed Aug 01, 2018 5:12 pm

The $7 trillion asset manager's seemingly blatant effort to capture more market share also includes cutting fees to zero across a long list of traditional revenue sources, including account service fees, transfer fees, low-balance fees and IRA closeout fees.
http://www.investmentnews.com/article/2 ... ndex-funds

Didn't want this good news to be missed in the hubbub.

I know when I opened my Fidelity IRA there was a $50 closeout fee documented. Seems this and several other fees are now $0. Although if I'm reading the fee schedule correctly, ATM fee reimbursement still only applies to the Fidelity Cash Management account, not the regular brokerage account ("Fidelity Account").

https://www.fidelity.com/trading/commis ... rgin-rates
https://www.fidelity.com/bin-public/060 ... hedule.pdf

grandpadan
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No cost Fidelity index fund

Post by grandpadan » Wed Aug 01, 2018 5:33 pm

[Thread merged into here, see below. --admin LadyGeek]

Saw the news this morning.

https://www.cnbc.com/2018/08/01/fidelit ... -fund.html

Think Vanguard will follow?

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Re: No cost Fidelity index fund

Post by sschullo » Wed Aug 01, 2018 5:37 pm

grandpadan wrote:
Wed Aug 01, 2018 5:33 pm
Saw the news this morning.

https://www.cnbc.com/2018/08/01/fidelit ... -fund.html

Think Vanguard will follow?
We'll see.
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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by Dottie57 » Wed Aug 01, 2018 5:38 pm

rgs92 wrote:
Wed Aug 01, 2018 1:32 pm
I like Fidelity but the only problem is that they have too many funds.
You need to drill down to find the hidden gems, like the Freedom Index funds or the good money market ones.
They must have over 20 money market funds.

It seems like they start a new fund every week.

Dodge and Cox they are not. They have all of 6 funds.
What are the good fido money markets? With reasonable starting amounts?

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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by LadyGeek » Wed Aug 01, 2018 5:41 pm

I merged grandpadan's thread into the on-going discussion. The combined thread is in the Investing - Theory, News & General forum (news).
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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by AndroAsc » Wed Aug 01, 2018 5:57 pm

I don't know why people are getting all excited over ZERO ER!!! Isn't Vanguard's 0.1-0.2% low enough?

I have 2 words: TRACKING ERROR. If these "zero" ER funds do a bad job at tracking your index, that can be more painful than 0.1-0.2% ER.

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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by KnowNth » Wed Aug 01, 2018 6:08 pm

Could you please explain to a newbie? Are you saying the fidelity total market fund is more risky than Vanguard total market fund?

triceratop wrote:
Wed Aug 01, 2018 12:48 pm

So for Total Stock Market about 40% of the return goes to investors who take 100% of the risk. Sweet deal, I'm sure Fidelity is loving this PR! :twisted:

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JamesSFO
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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by JamesSFO » Wed Aug 01, 2018 6:17 pm

What a change for investors, it will be interesting how Vanguard responds. I'm particularly pleased that even without having to sell my small Fido Total US/Total Intl positions they are dropping the ERs. 0.015 [edit] and 0.06 respectively now it seems.

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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by qwertyjazz » Wed Aug 01, 2018 6:24 pm

triceratop wrote:
Wed Aug 01, 2018 3:00 pm
MnD wrote:
Wed Aug 01, 2018 2:41 pm
It doesn't read like Vanguard is doing anything different than Fidelity given they acknowledge paying for lending program costs, agent fees and brokerage rebates out of gross security lending revenue with only the remainder going back to the funds. You seem to try to be making the case that Fidelity is doing something risky or untoward that Vanguard isn't.
You're right, it does read like they are doing similar things. I'm still skeptical.
Skeptical is very reasonable. It would be useful though to have an intellectual framework or more helpfully explicit model to consider the risk of security lending. I am not sure though that even with such a model Fidelity or Vanguard would be willing to provide the required data to analyze it. At first glance, you would need to understand both the percentage of shares lent and the stability of the collateral held. Have you seen any good models or preferably analysis of risk of share lending?
Thank you
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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by triceratop » Wed Aug 01, 2018 6:25 pm

KnowNth wrote:
Wed Aug 01, 2018 6:08 pm
Could you please explain to a newbie? Are you saying the fidelity total market fund is more risky than Vanguard total market fund?

triceratop wrote:
Wed Aug 01, 2018 12:48 pm

So for Total Stock Market about 40% of the return goes to investors who take 100% of the risk. Sweet deal, I'm sure Fidelity is loving this PR! :twisted:
I may have been mistaken about this. Fidelity claims that 100% of net securities lending revenue goes to the fund.
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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by alpenglow » Wed Aug 01, 2018 6:28 pm

AndroAsc wrote:
Wed Aug 01, 2018 5:57 pm
I don't know why people are getting all excited over ZERO ER!!! Isn't Vanguard's 0.1-0.2% low enough?

I have 2 words: TRACKING ERROR. If these "zero" ER funds do a bad job at tracking your index, that can be more painful than 0.1-0.2% ER.
With a nice reduction in Fidelity's other ER's, I'll be waiting to see how these funds perform before I make any changes.

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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by rgs92 » Wed Aug 01, 2018 6:32 pm

1 basis point on a million dollars is $100. I just put that in for perspective here to cast annual expenses in real dollar terms, not to offer any value judgement.

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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by whodidntante » Wed Aug 01, 2018 6:35 pm

rgs92 wrote:
Wed Aug 01, 2018 6:32 pm
1 basis point on a million dollars is $100. I just put that in for perspective here to cast annual expenses in real dollar terms, not to offer any value judgement.
If I found a $100 bill lying on the ground, I would pick it up.

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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by totalnoobie » Wed Aug 01, 2018 6:37 pm

manuvns wrote:
Wed Aug 01, 2018 4:28 pm
er doesn't matter, ETF are better due to option/ covered calls can pay for expense .
Can OP or someone please explain what this means?

Thanks

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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by stlutz » Wed Aug 01, 2018 6:38 pm

I'm not seeing anything in Fidelity's filings that suggests that they aren't returning all of the net lending revenue to the fund. iShares does not do so and it's very explicit in the SAI that they aren't (provided you scroll down to page 134 :D ).

That said, it seems like Fidelity's program isn't that efficient on the face of it. If I look at Vanguard Total Market, 92% of the gross lending revenue is left after expenses. On Fidelity's, it's only 39%.

Fidelity looks to be much more aggressive with their lending program. Despite what I've noted above, securities lending income comes very close to matching total fund expenses. For Vanguard the lending income is about 1/3 of expenses.

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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by FIREchief » Wed Aug 01, 2018 6:42 pm

A few questions for the experts on how mutual funds work. Let's assume that a meaningful percentage of current investors in FSTVX (Fidelity total market index) put in orders this Friday (first day available) to sell FSTVX and buy FZROX (new Fidelity Zero ER total market index).

Would this force the FSTVX fund managers to sell a huge amount of the fund's holdings late in the Friday trading day?

If so, would there be any adverse affects on the fund's share holders such as:
a) distorted (negatively) NAV for the shares sold Friday to buy FZROX?
b) a large portion of FZROX assets being "out of the market" due to a huge cash influx that won't be able to be put into the market until at least Monday?
c) larger than usual capital gains distributions for those shareholders who remain in FSTVX?

Are we in unexplored territory here or will all of this play out without any potential unintended consequences? Should we all just hold off or would it be better to be among the first in the water? :confused
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by oldcomputerguy » Wed Aug 01, 2018 6:43 pm

marcopolo wrote:
Wed Aug 01, 2018 9:19 am
I wish they had simply dropped the ER of their existing funds (FSTVX and FSIVX) to ZERO. The large capital gains I have will likely prevent me from taking advantage of the lower ERs on these new funds.
Well, they didn’t drop them to zero, but looking just now at FSTVX, they did drop it to 0.015%, which is, like, Institutional-Premium-class low. And the international fund they launched back in 2016 (FTIPX) likewise has been lowered (used to be 0.11%, now 0.06%). Both FSTVX and FTIPX now have a $0 minimum investment.

:greedy
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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by FIREchief » Wed Aug 01, 2018 6:43 pm

whodidntante wrote:
Wed Aug 01, 2018 6:35 pm
rgs92 wrote:
Wed Aug 01, 2018 6:32 pm
1 basis point on a million dollars is $100. I just put that in for perspective here to cast annual expenses in real dollar terms, not to offer any value judgement.
If I found a $100 bill lying on the ground, I would pick it up.
+1. I would pick up $1 (maybe not if it were 100 pennies). :sharebeer
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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No Fee Index Fund

Post by fabis » Wed Aug 01, 2018 6:44 pm

[Thread merged into here, see below (next page). --admin LadyGeek]

https://www.cnbc.com/2018/08/01/fidelit ... -fund.html

Vanguard, what are you going to do to match this?

Fidelity one-ups Vanguard, Schwab and iShares, becoming first company to offer a no-fee index fund
Fidelity Investments is introducing two core equity index mutual funds covering the U.S. and international markets without any management fee.
The fee war in the index fund and ETF space has been intense with leaders Vanguard Group, Schwab and BlackRock iShares engaged in an endless battle to be the low-fee leader. Experts have long expected that a major fund company would make the move soon to offer core index funds without any fee.

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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by bosocal » Wed Aug 01, 2018 6:49 pm

Dottie57 wrote:
Wed Aug 01, 2018 5:38 pm
rgs92 wrote:
Wed Aug 01, 2018 1:32 pm
I like Fidelity but the only problem is that they have too many funds.
You need to drill down to find the hidden gems, like the Freedom Index funds or the good money market ones.
They must have over 20 money market funds.

It seems like they start a new fund every week.

Dodge and Cox they are not. They have all of 6 funds.
What are the good fido money markets? With reasonable starting amounts?
I have been very happy with FSTVX(Total Market), FSBAX(Short Term Treasury) and FTIPX(Total International). I am even happier with them now with the lower ER and no minimum investment.

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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by triceratop » Wed Aug 01, 2018 6:51 pm

stlutz wrote:
Wed Aug 01, 2018 6:38 pm
I'm not seeing anything in Fidelity's filings that suggests that they aren't returning all of the net lending revenue to the fund. iShares does not do so and it's very explicit in the SAI that they aren't (provided you scroll down to page 134 :D ).

That said, it seems like Fidelity's program isn't that efficient on the face of it. If I look at Vanguard Total Market, 92% of the gross lending revenue is left after expenses. On Fidelity's, it's only 39%.

Fidelity looks to be much more aggressive with their lending program. Despite what I've noted above, securities lending income comes very close to matching total fund expenses. For Vanguard the lending income is about 1/3 of expenses.
It's also true that Fidelity doesn't state how much of the revenue goes back to Fidelity in some form or another. The inefficiency of Fidelity is what made me think something fishy is going on, and I'm still not sure I completely understand it--the rebate to borrower is so much higher for Fidelity (57%) than Vanguard (6%) for the same class of funds. Whether it's inefficiency in negotiating or Fidelity gets some revenue in some way, the fact is still that investors are taking 100% of the risk for much less of the reward.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by TimeRunner » Wed Aug 01, 2018 6:59 pm

I'd like to see a Fido fund, index-based, equivalent to Vanguard Total World, using FTSE Global All Cap Index, especially because there's no "Admiral" version of the mutual fund, and no Fido equivalent in Mutual Fund or ETF. Fido does have a Wordwide Fund (FWWFX), but it has 325 stocks, turnover of 122%, and expense ratio of 0.81%. It's actively managed. Yes, I know it's trivial to hold two funds to comprise this, but I'd rather hold one.
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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by blaugranamd » Wed Aug 01, 2018 7:01 pm

For those willing to swap funds for 4 no less in ER, what do you think about VG TSM (VTSAX) YTD yield of 6.74% compared to Fido TSM (FSTVX) at 6.69%? That 5 bp difference in yield covers the ER difference.

10 year differences of 10.78 vs 10.71% is a 7 bp difference, respectively so probably even covers after tax return difference between the ERs.
-- Don't mistake more funds for more diversity: Total Int'l + Total Market = 7k to 10k stocks -- | -- Market return does NOT = average nor 50th percentile, rather 80-90th percentile long term ---

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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by Broken Man 1999 » Wed Aug 01, 2018 7:02 pm

Inertia is pretty powerful.

Time will tell, but I'm not going to jump for such little gain. Too lazy.

I can afford to wait and see, and I believe I am not alone. Might be a wonderful opportunity, might not be.

I doubt seriously that Vanguard's management team is shaking in their boots over this.

Good for Fidelity, activities that help the investor are good to see. Competition is always a good thing. Keeps everybody on their toes.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by stlutz » Wed Aug 01, 2018 7:05 pm

Where I wish Vanguard would feel pressure with this move is to get rid of the distinction between Investor and Admiral share and just promote everyone to Admiral.

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Re: No Fee Index Fund

Post by zapper » Wed Aug 01, 2018 7:07 pm

I'm going to hold out until somebody offers to pay me .5% annually to invest in their fund.

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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by smectym » Wed Aug 01, 2018 7:08 pm

Vanguard is great, I've been with them forever, but agree with a few other commenters: investors should not let some sentimental attachment to Vanguard affect the investment decision-making process.

If we liked Vanguard back when it was "cheapest," and now Acme is "cheapest," we should now like Acme better than Vanguard. Ceteris paribus, of course. Vanguard doesn't have a halo. We should not speak of Vanguard in hushed and worshipful tones.

Smectym

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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by Nate79 » Wed Aug 01, 2018 7:09 pm

blaugranamd wrote:
Wed Aug 01, 2018 7:01 pm
For those willing to swap funds for 4 no less in ER, what do you think about VG TSM (VTSAX) YTD yield of 6.74% compared to Fido TSM (FSTVX) at 6.69%? That 5 bp difference in yield covers the ER difference.

10 year differences of 10.78 vs 10.71% is a 7 bp difference, respectively so probably even covers after tax return difference between the ERs.
These funds do not track the same index. So while VTSAX did indeed have slightly better performance this could be purely luck because of index differences.

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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by stlutz » Wed Aug 01, 2018 7:11 pm

Something else I haven't seen mentioned--apparently they now offer 240 iShares ETFs commission free as opposed to the more limited list they had previously.

https://www.fidelity.com/bin-public/060 ... e-ETFs.pdf

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