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

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
DippityDoo
Posts: 124
Joined: Mon May 29, 2017 6:06 pm

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

Post by DippityDoo » Wed Aug 01, 2018 7:14 pm

johnanglemen wrote:
Wed Aug 01, 2018 4:39 pm
* 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?
I've been pondering this. For my taxable account, ITOT (iShares Total US Stock Market) with its .03 ER may be the better buy.

User avatar
blaugranamd
Posts: 579
Joined: Wed Apr 11, 2012 1:57 pm
Location: D-lux apt in the sky

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 7:22 pm

Nate79 wrote:
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.
What if it's inherent in the index, tracking error, losses due to turnover?
-- 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 ---

marcopolo
Posts: 2085
Joined: Sat Dec 03, 2016 10:22 am

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

Post by marcopolo » Wed Aug 01, 2018 7:40 pm

oldcomputerguy wrote:
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
Yes. I saw that later in the day. Good news all around
Once in a while you get shown the light, in the strangest of places if you look at it right.

User avatar
LadyGeek
Site Admin
Posts: 54139
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

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 7:42 pm

stlutz wrote:
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
The related discussion: Vanguard to offer non-Vanguard ETFs commission-free (stlutz also posted the info there.)
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

User avatar
LadyGeek
Site Admin
Posts: 54139
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

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 7:45 pm

I merged fabis's thread into the on-going discussion, which is in the Investing - Theory, News & General forum.

(Thanks to the member who got our attention by reporting the post. One of the reasons is "Duplicate thread.")
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

wolf359
Posts: 1618
Joined: Sun Mar 15, 2015 8:47 am

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

Post by wolf359 » Wed Aug 01, 2018 7:45 pm

Meaty wrote:
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?
Some thoughts:
- Let's say you have $100,000 in VTSAX (Vanguard Total Stock Market). Your ER is .04, so your annual expense is $40/year. To move to Fidelity, you have to sell your existing holdings, incurring capital gains taxes, and then you will save $40/year. How long will it take to recoup the taxes that it would cost you to switch? (The capital gains liability, of course, will vary from person to person, so this is an individualized cost.)

- If you have $500,000 in VTSAX, your savings is even greater, at $200/year. Of course, your capital gains taxes would also be significantly higher.

- This Fidelity fund appears to be only available for taxable accounts. Most people have the bulk of their money in 401k or IRA accounts. You'll move your taxable money to Fidelity, but if you want to stick to one platform, you'll move your tax sheltered money as well. The larger amounts of tax sheltered money will collect normal ERs.

I'll be willing to try them out, and will be comparing their performance, liquidity, and tax-efficiency to Vanguard's. I already have accounts at both Vanguard and Fidelity. Vanguard's current Total Stock Market product has a better return and is more tax efficient than Fidelity. If I use it for new money only, the savings will probably not be that significant. You're only saving $4 for every $10,000 invested. If you've held Vanguard for a long time, your capital gains liability will be signficant. A mere $600 in taxes on $10K would take 150 years to recoup. And if Fidelity continues to be less tax efficient, the savings would be less, and breakeven would take longer.

User avatar
camper
Posts: 856
Joined: Thu Dec 04, 2008 11:51 pm
Location: My side of the mountain

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

Post by camper » Wed Aug 01, 2018 8:12 pm

wolf359 wrote:
Wed Aug 01, 2018 7:45 pm
Meaty wrote:
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?

- This Fidelity fund appears to be only available for taxable accounts.
The prospectus does not state these funds are only available for taxable accounts.

zeugmite
Posts: 1079
Joined: Tue Jul 22, 2008 11:48 pm

Re: New Fidelity Fund 0.00 ER

Post by zeugmite » Wed Aug 01, 2018 8:16 pm

bosocal wrote:
Wed Aug 01, 2018 11:18 am
As a Fidelity customer I just checked and it appears they are no longer having a minimum for any of there mutual funds including this and they have dramatically slashed all there fees. Example total international(FTIGX) went from .17 yesterday to .06 today.
Wow yeah, even the MM fund that I bought for brokerage checking no longer has a minimum, making one fewer thing to worry about for such banking use.

28fe6
Posts: 393
Joined: Wed Jan 03, 2018 9:01 am

Re: New Fidelity Fund 0.00 ER

Post by 28fe6 » Wed Aug 01, 2018 8:20 pm

SelfEmployed123 wrote:
Wed Aug 01, 2018 10:56 am
What's next, a negative ER fund?
Well, Brokerages have been known to offer bonuses for investing with them. That's sort of negative.

GeraniumLover
Posts: 155
Joined: Mon Feb 22, 2016 3:39 pm

Re: New Fidelity Fund 0.00 ER

Post by GeraniumLover » Wed Aug 01, 2018 8:28 pm

zeugmite wrote:
Wed Aug 01, 2018 8:16 pm

Wow yeah, even the MM fund that I bought for brokerage checking no longer has a minimum, making one fewer thing to worry about for such banking use.
Which MM is that? I see that their highest-yielding "Prime" ones still have $100,000 and $1,000,000 minimums....

User avatar
Topic Author
jhfenton
Posts: 4027
Joined: Sat Feb 07, 2015 11:17 am
Location: Ohio

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

Post by jhfenton » Wed Aug 01, 2018 8:35 pm

stlutz wrote:
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.
+1 I've been thinking that for a while. Getting rid of the Investor Share classes would save a tiny bit of overhead managing the extra share class. It might add a bp to the Admiral Shares to dump all of the Investor Shares in their, but it might eventually make up for it by attracting more assets.

On the other hand, they currently strategically use Investor Shares in their Target Retirement funds in order to make those viable. They would have to move money around to make that work.

And for the handful of funds that don't have Admiral Shares (like my VSS/VFSVX - All-World ex-US Small Cap) they would have to figure something out. I feel like the Investor Share class subsidizes the much-larger ETF share class a bit currently. I don't completely buy the accounting that has VFSVX at 25 bp and VSS at 13 bp. Some of it is just their arbitrary share-of-costs model for Investor shares vs Admiral Shares and ETF Shares, and it makes less sense when there are no Admiral Shares.
FIREchief wrote:
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
Fund families trade between funds all the time. You could still end up with capital gains issues in the fund losing assets, but Fidelity wouldn't have to worry about moving the markets by passing the stocks through the public market.

Families are supposed to be fair and neutral in their pricing when they trade privately, but there have been some analyses showing favoritism in internal markets in less-scrupulous fund families. I don't think that would be an issue with Fidelity. They could simply swap stocks between nearly identical funds at EOD prices if they needed too.

JustinR
Posts: 1053
Joined: Tue Apr 27, 2010 11:43 pm

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

Post by JustinR » Wed Aug 01, 2018 8:38 pm

1) Will they offer ETF equivalents?

2) What's to stop other brokerages from offering the same funds? Fidelity offers Vanguard funds does it not?

baliktad
Posts: 52
Joined: Sun Mar 26, 2017 12:13 pm

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 8:42 pm

wolf359 wrote:
Wed Aug 01, 2018 7:45 pm
- This Fidelity fund appears to be only available for taxable accounts.
This is not correct. The prospectus indicates that these new funds are available in any "retail" account, whether taxable or tax-advantaged. Basically if you personally own the account, you can buy these funds. If your funds are an employer's account like a 401K, you'd have to roll over to a personally owned account like an IRA.
Purchase and Sale of Shares
Shares of the fund are available only to individual retail investors who purchase their shares through a Fidelity brokerage account, including retail non-retirement accounts, retail retirement accounts (traditional, Roth and SEP Individual Retirement Accounts (IRAs)), health savings accounts (HSAs), and stock plan services accounts.

User avatar
telemark
Posts: 2443
Joined: Sat Aug 11, 2012 6:35 am

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

Post by telemark » Wed Aug 01, 2018 8:42 pm

FrugalProfessor wrote:
Wed Aug 01, 2018 2:36 pm
This is great news. I just logged onto my 401k account at Fidelity.

FSKTX was 0.03% last time I checked a few months back. It's now 0.015%.
FTIPX was 0.10% last time I checked a few months back. It's now 0.06%.

If those expenses drop even further to zero, as the article indicates, this will be incredible for investors.

For as sentimental as most of us are towards Vanguard, index funds are commodities. I'll wait a few months then jump ship entirely to Fidelity at zero fees. I see no good reason not to.
I see a framing issue here. If you were paying 1.03% and it dropped to 1.015%, would you be equally thrilled? Either way you're adding one and a half basis points to your annual return.

User avatar
Meaty
Posts: 675
Joined: Mon Jul 22, 2013 7:35 pm
Location: Texas

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 8:53 pm

wolf359 wrote:
Wed Aug 01, 2018 7:45 pm
Meaty wrote:
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?
Some thoughts:
- Let's say you have $100,000 in VTSAX (Vanguard Total Stock Market). Your ER is .04, so your annual expense is $40/year. To move to Fidelity, you have to sell your existing holdings, incurring capital gains taxes, and then you will save $40/year. How long will it take to recoup the taxes that it would cost you to switch? (The capital gains liability, of course, will vary from person to person, so this is an individualized cost.)

- If you have $500,000 in VTSAX, your savings is even greater, at $200/year. Of course, your capital gains taxes would also be significantly higher.

- This Fidelity fund appears to be only available for taxable accounts. Most people have the bulk of their money in 401k or IRA accounts. You'll move your taxable money to Fidelity, but if you want to stick to one platform, you'll move your tax sheltered money as well. The larger amounts of tax sheltered money will collect normal ERs.

I'll be willing to try them out, and will be comparing their performance, liquidity, and tax-efficiency to Vanguard's. I already have accounts at both Vanguard and Fidelity. Vanguard's current Total Stock Market product has a better return and is more tax efficient than Fidelity. If I use it for new money only, the savings will probably not be that significant. You're only saving $4 for every $10,000 invested. If you've held Vanguard for a long time, your capital gains liability will be signficant. A mere $600 in taxes on $10K would take 150 years to recoup. And if Fidelity continues to be less tax efficient, the savings would be less, and breakeven would take longer.
Makes complete sense. Very appreciated
"Discipline equals Freedom" - Jocko Willink

AlphaLess
Posts: 1526
Joined: Fri Sep 29, 2017 11:38 pm
Location: Kentucky

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

Post by AlphaLess » Wed Aug 01, 2018 8:54 pm

But Fidelity first needs to learn how to track the index well, as it is not just about zero fees.

Once they learn that, they need to learn how to make their fund more tax efficient.

A long way to go, for sure.

Not to mention that Vanguard will eventually drop their expense ratio on VTSAX to probably 2 bps.
"You can get more with a kind word and a gun than with just a kind word." George Washington

baliktad
Posts: 52
Joined: Sun Mar 26, 2017 12:13 pm

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 8:56 pm

JustinR wrote:
Wed Aug 01, 2018 8:38 pm
What's to stop other brokerages from offering the same funds? Fidelity offers Vanguard funds does it not?
Vanguard only makes its lowest-cost "Admiral" share class funds available to accounts held at Vanguard itself. You can buy the slightly more expensive "Investor" class funds at other brokerages, including Fidelity. This is an intentional decision by Vanguard to encourage investors to hold their funds directly with Vanguard.

Other brokerages may choose to create their own zero-ER funds, but for now it seems that Fidelity is limiting the sale of these particular funds to purchases within Fidelity acccounts only.

AlphaLess
Posts: 1526
Joined: Fri Sep 29, 2017 11:38 pm
Location: Kentucky

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

Post by AlphaLess » Wed Aug 01, 2018 8:57 pm

baliktad wrote:
Wed Aug 01, 2018 8:56 pm
JustinR wrote:
Wed Aug 01, 2018 8:38 pm
What's to stop other brokerages from offering the same funds? Fidelity offers Vanguard funds does it not?
Vanguard only makes its lowest-cost "Admiral" share class funds available to accounts held at Vanguard itself. You can buy the slightly more expensive "Investor" class funds at other brokerages, including Fidelity. This is an intentional decision by Vanguard to encourage investors to hold their funds directly with Vanguard.

Other brokerages may choose to create their own zero-ER funds, but for now it seems that Fidelity is limiting the sale of these particular funds to purchases within Fidelity acccounts only.
I own VTSAX in non-Vanguard brokerage account.
"You can get more with a kind word and a gun than with just a kind word." George Washington

AlphaLess
Posts: 1526
Joined: Fri Sep 29, 2017 11:38 pm
Location: Kentucky

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

Post by AlphaLess » Wed Aug 01, 2018 9:00 pm

"You can get more with a kind word and a gun than with just a kind word." George Washington

Lyrrad
Posts: 63
Joined: Sun Jul 27, 2008 10:59 am

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

Post by Lyrrad » Wed Aug 01, 2018 9:01 pm

wolf359 wrote:
Wed Aug 01, 2018 7:45 pm

I'll be willing to try them out, and will be comparing their performance, liquidity, and tax-efficiency to Vanguard's. I already have accounts at both Vanguard and Fidelity. Vanguard's current Total Stock Market product has a better return and is more tax efficient than Fidelity. If I use it for new money only, the savings will probably not be that significant. You're only saving $4 for every $10,000 invested. If you've held Vanguard for a long time, your capital gains liability will be signficant. A mere $600 in taxes on $10K would take 150 years to recoup. And if Fidelity continues to be less tax efficient, the savings would be less, and breakeven would take longer.
From what I can tell, Fidelity's current Total Stock Market Index Fund has a similar dividend payout percentage to Vanguard's, with a similar qualified dividend percentage. I am concerned by the capital gains distributions, that seem to be about 0.55% of assets over the past year , which would seem to result in about 0.08% in taxes at a 15% long term capital gains rate (about 95% of the capital gains seem to be long-term).

I'm not sure how to do the calculation to properly compare their tax efficiency over time, since the capital gains distribution, if reinvested, would also raise the total cost basis of the investment and possibly result in less taxes paid when eventually sold.

AlphaLess
Posts: 1526
Joined: Fri Sep 29, 2017 11:38 pm
Location: Kentucky

Re: New Fidelity Fund 0.00 ER

Post by AlphaLess » Wed Aug 01, 2018 9:02 pm

SelfEmployed123 wrote:
Wed Aug 01, 2018 10:56 am
Wow. I understand there has been a race to the bottom for a while, but this seems unsustainable. I mean...they've gotta keep the lights and their computer servers running, right? I suppose they are trying to get people in the door and then will plan on selling them more expensive funds.

What's next, a negative ER fund?
Everything is relative.

Fidelity has ways to monetize this:
- get you in the door, then try to sell you 'advice',
- get you in the door, then entice you to trade stocks,
- lend your securities for profit,
- etc
"You can get more with a kind word and a gun than with just a kind word." George Washington

AlphaLess
Posts: 1526
Joined: Fri Sep 29, 2017 11:38 pm
Location: Kentucky

Re: New Fidelity Fund 0.00 ER

Post by AlphaLess » Wed Aug 01, 2018 9:04 pm

gips wrote:
Wed Aug 01, 2018 11:29 am
One of the premises was that we could build a low-cost, nimble infrastructure while ...
Sorry to say, but that right there is a pipe dream.
"You can get more with a kind word and a gun than with just a kind word." George Washington

stlutz
Posts: 5095
Joined: Fri Jan 02, 2009 1:08 am

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 9:06 pm

jhfenton wrote:
Wed Aug 01, 2018 8:35 pm
stlutz wrote:
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.
+1 I've been thinking that for a while. Getting rid of the Investor Share classes would save a tiny bit of overhead managing the extra share class. It might add a bp to the Admiral Shares to dump all of the Investor Shares in their, but it might eventually make up for it by attracting more assets.
On the other hand if I was Vanguard I might say, "not so fast"

Was just looking at the Annual report for Total Market and the expense breakouts were as follows:

Management and Administrative—Investor Shares 138,370
Management and Administrative—ETF Shares 21,717
Management and Administrative—Admiral Shares 48,094
Management and Administrative—Institutional Shares 25,275
Management and Administrative—Institutional Plus Shares 15,652
Management and Administrative—Institutional Select Shares 653
Marketing and Distribution—Investor Shares 16,089
Marketing and Distribution—ETF Shares 3,508
Marketing and Distribution—Admiral Shares 9,942
Marketing and Distribution—Institutional Shares 2,645
Marketing and Distribution—Institutional Plus Shares 1,389
Marketing and Distribution—Institutional Select Shares 1
Shareholders’Reports and Proxy—Investor Shares 4,146
Shareholders’Reports and Proxy—ETF Shares 3,311
Shareholders’Reports and Proxy—Admiral Shares 2,531
Shareholders’Reports and Proxy—Institutional Shares 1,883
Shareholders’Reports and Proxy—Institutional Plus Shares 63
Shareholders’Reports and Proxy—Institutional Select Shares 0

Cutting investor shares expenses by 75% would have a more significant impact than I would have guessed.

User avatar
LadyGeek
Site Admin
Posts: 54139
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

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 9:07 pm

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.
Here's how to find the Prospectus:

Go to the SEC's EDGAR database --> Company filings.

The direct link: EDGAR | Company Filings

Enter "Fidelity Salem Street Trust", which gets you to the search results here.

Prospectuses are filed as Form 485APOS. There are 2 filings for 2018-08-01. Click on the "Documents" button for each entry to get to the next screen. Note that they both go to the same page: Form 485APOS

This page shows there 2 funds in this document:
- Fidelity ZERO Total Market Index Fund - ticker symbol = FZROX
- Fidelity ZERO International Index Fund - ticker symbol = FZILX

The actual form is the file under "Primary Document". Here's the link: filing836.htm.

What hasn't been posted yet are the remaining 7 attachments to the main document "Seq 2 - 8", two logos ("Seq 10 - 11"), and the complete filing in plain text format. I would encourage new investors to explore the remaining document files so you can see the filing in all its gory detail.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

zeugmite
Posts: 1079
Joined: Tue Jul 22, 2008 11:48 pm

Re: New Fidelity Fund 0.00 ER

Post by zeugmite » Wed Aug 01, 2018 9:10 pm

GeraniumLover wrote:
Wed Aug 01, 2018 8:28 pm
zeugmite wrote:
Wed Aug 01, 2018 8:16 pm

Wow yeah, even the MM fund that I bought for brokerage checking no longer has a minimum, making one fewer thing to worry about for such banking use.
Which MM is that? I see that their highest-yielding "Prime" ones still have $100,000 and $1,000,000 minimums....
The ones that were $2500 to buy, $1500 to keep, lowest mins, but still annoying to have to pad the checking account. SPRXX was one.

User avatar
Topic Author
jhfenton
Posts: 4027
Joined: Sat Feb 07, 2015 11:17 am
Location: Ohio

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

Post by jhfenton » Wed Aug 01, 2018 9:22 pm

stlutz wrote:
Wed Aug 01, 2018 9:06 pm
Cutting investor shares expenses by 75% would have a more significant impact than I would have guessed.
Interesting. Out of curiosity, I'll pick three funds tomorrow--Total Stock, All-World ex-US Small Cap, and a third equity fund that is not included in any funds of funds--and look at those expense breakdowns and see what it would do to expenses if they lumped Investor expenses and assets in with Admiral and ETF shares and assets. That would give us worst-case scenario. (I want to look at a third equity fund that does not have a huge portion of assets coming into the Investor Share class from funds of funds.)

evofxdwg
Posts: 103
Joined: Sun Aug 17, 2008 1:02 pm

Re: Fidelity no cost index fund

Post by evofxdwg » Wed Aug 01, 2018 9:26 pm

lostdog wrote:
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.
Yep. Me too!
I wonder if it will help to ask my VG adviser a few questions? (most of which are already brought up in this thread)
Also: If a person qualifies for Flagship services, but does not use them, how about a further discount?

User avatar
triceratop
Moderator
Posts: 5837
Joined: Tue Aug 04, 2015 8:20 pm
Location: la la land

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 9:46 pm

jhfenton wrote:
Wed Aug 01, 2018 9:22 pm
stlutz wrote:
Wed Aug 01, 2018 9:06 pm
Cutting investor shares expenses by 75% would have a more significant impact than I would have guessed.
Interesting. Out of curiosity, I'll pick three funds tomorrow--Total Stock, All-World ex-US Small Cap, and a third equity fund that is not included in any funds of funds--and look at those expense breakdowns and see what it would do to expenses if they lumped Investor expenses and assets in with Admiral and ETF shares and assets. That would give us worst-case scenario. (I want to look at a third equity fund that does not have a huge portion of assets coming into the Investor Share class from funds of funds.)

I see 53% higher expenses for Total Stock expenses aggregated across Investor/ETF/Admiral as compared to Admiral. This is only the costs that are broken down by share class type in the annual report.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

User avatar
1030danielle
Posts: 52
Joined: Fri Jul 15, 2016 12:25 pm
Location: South Florida

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

Post by 1030danielle » Wed Aug 01, 2018 10:12 pm

Do you think this no-fee index fund will lure you away from Vanguard? The numbers are sort of compelling.

Image
Three-funder with a tech tilt.

MnD
Posts: 4274
Joined: Mon Jan 14, 2008 12:41 pm

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 10:18 pm

After the dust settles, "core" and near-core index funds will be free versus almost free and who one goes with will depend on a variety of individualized factors and preferences. Likes and dislikes about service and web sites, where your employer retirement accounts are located - those sorts of things will rule decison making. Costs for individual accounts (taxable, IRA's) will become even more irrelevant.

finagle
Posts: 64
Joined: Sun Oct 30, 2016 9:33 am

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

Post by finagle » Wed Aug 01, 2018 10:34 pm

marcopolo wrote:
Wed Aug 01, 2018 9:19 am
jhfenton wrote:
Wed Aug 01, 2018 9:12 am
I saw someone tweet about, but I can't find any other news: Fidelity ZERO℠ Funds (Zero Expense Ratio Offering)

There are two funds included in the filing:

Fund Name Ticker
Fidelity ZERO℠ International Index Fund FZILX
Fidelity ZERO℠ Total Market Index Fund FZROX

The international fund includes developed and emerging markets.

Availability will apparently be limited to direct Fidelity customers:
Shares of the fund are available only to individual retail investors who purchase their shares through a Fidelity brokerage account, including retail non-retirement accounts, retail retirement accounts (traditional, Roth and SEP Individual Retirement Accounts (IRAs)), health savings accounts (HSAs), and stock plan services accounts.
No word in the filing on whether there are any further limitations, such as their only being available in AUM-based accounts.
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.
I'm in fsivx (no emerging markets) and I feel very incomplete, internationally. It's in my taxable and I don't want to sell it then and buy a different Fido intl fund (taxable event headache). So I still keep DCAing into damn Fsivx.

If you want true Boglehead style Total Intl (developed+emerging), buy ftipx which only started in 2016. Or buy today's new 0%er fzilx.

https://www.fidelity.com/mutual-funds/i ... ndex-funds

Edit: starting Sept 2018, I might DCA my usual $500 monthly into this new 0%er fzilx, instead of "developed intl only" fsivx any longer. Gives me 1 month to research if this new fzilx=ftipx=vtiax, holdings wise.

Also, I hope this is not a scheme by Fido. Like how comcast offers $30 internet bundle for the first year... Then $90 per month subsequently.
Last edited by finagle on Wed Aug 01, 2018 10:42 pm, edited 1 time in total.

User avatar
1030danielle
Posts: 52
Joined: Fri Jul 15, 2016 12:25 pm
Location: South Florida

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

Post by 1030danielle » Wed Aug 01, 2018 10:38 pm

stlutz wrote:
Wed Aug 01, 2018 6:38 pm

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 %.
Hi there. Can you tell me your source on this? Also, please excuse my ignorance, but what might these numbers mean as expressed in a “true”expense ratio?


Thanks,
Danielle
Three-funder with a tech tilt.

User avatar
triceratop
Moderator
Posts: 5837
Joined: Tue Aug 04, 2015 8:20 pm
Location: la la land

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 10:39 pm

1030danielle wrote:
Wed Aug 01, 2018 10:38 pm
stlutz wrote:
Wed Aug 01, 2018 6:38 pm

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 %.
Hi there. Can you tell me your source on this? Also, please excuse my ignorance, but what might these numbers mean as expressed in a “true”expense ratio?


Thanks,
Danielle


Look at the Statement of Additional Information (SAI) for each fund.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

limeyx
Posts: 269
Joined: Wed Sep 07, 2016 5:34 pm

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

Post by limeyx » Wed Aug 01, 2018 10:45 pm

corn18 wrote:
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.
Unless its a financial adviser charging 0.8% asset under management fee, then it's practically criminal :)

User avatar
1030danielle
Posts: 52
Joined: Fri Jul 15, 2016 12:25 pm
Location: South Florida

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

Post by 1030danielle » Wed Aug 01, 2018 10:49 pm

wolf359 wrote:
Wed Aug 01, 2018 7:45 pm

Some thoughts:
- Let's say you have $100,000 in VTSAX (Vanguard Total Stock Market). Your ER is .04, so your annual expense is $40/year. To move to Fidelity, you have to sell your existing holdings, incurring capital gains taxes, and then you will save $40/year. How long will it take to recoup the taxes that it would cost you to switch? (The capital gains liability, of course, will vary from person to person, so this is an individualized cost.)

...

- This Fidelity fund appears to be only available for taxable accounts. Most people have the bulk of their money in 401k or IRA accounts. You'll move your taxable money to Fidelity, but if you want to stick to one platform, you'll move your tax sheltered money as well. The larger amounts of tax sheltered money will collect normal ERs.

... You're only saving $4 for every $10,000 invested. If you've held Vanguard for a long time, your capital gains liability will be signficant. A mere $600 in taxes on $10K would take 150 years to recoup. And if Fidelity continues to be less tax efficient, the savings would be less, and breakeven would take longer.
Thank you for this. I have had $ invested 10+ years in a taxable account at VG (in addition to IRAs and 401k), and it's grown to the point that it seems like moving it and incurring capital gains would be a waste.
D
Three-funder with a tech tilt.

janeway
Posts: 9
Joined: Thu Mar 23, 2017 5:20 pm

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

Post by janeway » Wed Aug 01, 2018 10:53 pm

To comment on security lending, if you go to the vanguard info page for any fund (I went to VTSAX), go to the Overview page, click "View prospectus and reports", then "Annual Report", then look under "Statement of Operations" you can find the expenses and income breakdown.

For VTSAX the net income from securities lending was ~ $110 million. The total expenses were $320 million. So you could reduce the expense ratio by 1/3 if you account for the extra income from securities lending vanguard gives back to the fund.

Iridium
Posts: 428
Joined: Thu May 19, 2016 10:49 am

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

Post by Iridium » Wed Aug 01, 2018 11:08 pm

limeyx wrote:
Wed Aug 01, 2018 10:45 pm
corn18 wrote:
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.
Unless its a financial adviser charging 0.8% asset under management fee, then it's practically criminal :)
At least this is a ratio of an annual amount to an annual amount. Best trick financial advisors ever came up with was pricing their service as a ratio of an annual amount to a fixed amount. So much better to say 0.8% of assets, instead of ~15% of expected returns.

What it reveals though is that the largest mutual fund family in the world made close to nothing off its core index funds. Are their active funds what keep the lights on, or is it an unexpected part of the business. When I took a look at Schwab's earnings, I came away with the impression that half their business was just making money off funds kept in sweep accounts. I wonder if there is a similar mystery factor for Fidelity. Since they are not publicly traded, we may never find out. However, I think all the reports make far too much out of securities lending revenue. That might allow Fidelity to break even in the funds, but it won't power a multibillion dollar business. I think the fact that it is limited to retail is particularly telling. If the main motivation was securities lending, they would be happy to take big institutional bucks. Instead, they are signaling they want accounts more than AUM. Odd behavior for a 'mutual fund company'.

User avatar
UpsetRaptor
Posts: 347
Joined: Tue Jan 19, 2016 5:15 pm

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

Post by UpsetRaptor » Wed Aug 01, 2018 11:13 pm

Regarding Vanguard, this whole game might be trending in a direction where some brokerages who are more willing to take profits from customers with less financial knowledge have the leverage to offer more attractive options to customers with financial knowledge. Not 100% sure how I feel about that, but I think I'm okay with it.
Last edited by UpsetRaptor on Wed Aug 01, 2018 11:18 pm, edited 1 time in total.

User avatar
Nate79
Posts: 4519
Joined: Thu Aug 11, 2016 6:24 pm
Location: Delaware

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 11:17 pm

janeway wrote:
Wed Aug 01, 2018 10:53 pm
To comment on security lending, if you go to the vanguard info page for any fund (I went to VTSAX), go to the Overview page, click "View prospectus and reports", then "Annual Report", then look under "Statement of Operations" you can find the expenses and income breakdown.

For VTSAX the net income from securities lending was ~ $110 million. The total expenses were $320 million. So you could reduce the expense ratio by 1/3 if you account for the extra income from securities lending vanguard gives back to the fund.
Sure, and you can do the same for Fidelity or Schwab. You can look up their annual reports, find their expenses and subtract the lending revenue. All listed there for calculation.

limeyx
Posts: 269
Joined: Wed Sep 07, 2016 5:34 pm

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

Post by limeyx » Wed Aug 01, 2018 11:44 pm

Iridium wrote:
Wed Aug 01, 2018 11:08 pm
limeyx wrote:
Wed Aug 01, 2018 10:45 pm
corn18 wrote:
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.
Unless its a financial adviser charging 0.8% asset under management fee, then it's practically criminal :)
At least this is a ratio of an annual amount to an annual amount. Best trick financial advisors ever came up with was pricing their service as a ratio of an annual amount to a fixed amount. So much better to say 0.8% of assets, instead of ~15% of expected returns.

...
No argument at all from me here. I paid for the best part of the pool for my (thankfully ex) FA!

frankmorris
Posts: 344
Joined: Tue Apr 25, 2017 4:34 pm

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

Post by frankmorris » Thu Aug 02, 2018 12:07 am

I too share the questions about the tax efficiency of these new funds vs other mutual funds vs ETFs - if an ETF has better tax efficiency, I'm struggling to see why this would be better. Would be great to know the proposed or anticipated capital gains distributions as well as general turnover rates, perhaps even with some backtesting between how this fund will be managed vs others. Guessing we won't get that.

In general, do folks think that the tax efficiency of an ETF would be worth the 3 basis points in cost over the mutual fund version? If so, there's an answer.

As others have said, I'd be curious as to whether this is a "new" financial instrument, and what risk that poses with massive selling, etc. I can't help but daydream (nightmare version) a situation in which a market downturn is turned into a crash because of some unanticipated liquidity or other technical issue with the securities lending component of this. I have no basis to know any of that though.

JDDS
Moderator
Posts: 985
Joined: Sun Mar 16, 2014 2:24 pm

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

Post by JDDS » Thu Aug 02, 2018 2:09 am

triceratop wrote:
Wed Aug 01, 2018 9:46 pm
jhfenton wrote:
Wed Aug 01, 2018 9:22 pm
stlutz wrote:
Wed Aug 01, 2018 9:06 pm
Cutting investor shares expenses by 75% would have a more significant impact than I would have guessed.
Interesting. Out of curiosity, I'll pick three funds tomorrow--Total Stock, All-World ex-US Small Cap, and a third equity fund that is not included in any funds of funds--and look at those expense breakdowns and see what it would do to expenses if they lumped Investor expenses and assets in with Admiral and ETF shares and assets. That would give us worst-case scenario. (I want to look at a third equity fund that does not have a huge portion of assets coming into the Investor Share class from funds of funds.)

I see 53% higher expenses for Total Stock expenses aggregated across Investor/ETF/Admiral as compared to Admiral. This is only the costs that are broken down by share class type in the annual report.
I too have thought for a few years now it would be nice to throw out the distinction between Investor and Admiral shares for many funds. I think there are still some reasons to keep the distinction, but fewer perhaps than in the past. I started doing some analysis, but I never did finish getting enough numbers in place to understand it to my satisfaction. Meanwhile, Vanguard keeps adding, rather than subtracting fund classes!

One of the things I never quite understood: Vanguard would encourage you to invest with them by keeping Admiral shares limited, primarily to their platform. Yet they are then making less income on your shares, while having to handle your customer service needs, I guess it works out in volume.

gostars
Posts: 439
Joined: Mon Oct 09, 2017 7:53 pm

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

Post by gostars » Thu Aug 02, 2018 2:38 am

The overall lowering of fund ERs and removal of investment minimums makes Fidelity an attractive move. Curious what others have managed to get out of Fidelity in terms of rebating account transfer/closure fees and maybe tossing in a few free trades on low-value accounts. I help out some family members with BH-style investing and I'm wondering if it's worth the effort to call Fidelity and see if they'll rebate fees and maybe toss in 10 free trades (just to sell off various accumulated ETFs to be able to move into their funds) to move over a low five-figure balance. I know they're happy to play ball on bigger accounts, but I have no idea what they're like on small stuff. The account I'm thinking of is at Schwab now after collecting the $100 transfer bonus, but it inherited some Vanguard ETFs from TDA (switched when they dropped the Vanguard funds), and it just doesn't make sense to pay commissions to sell them off on such a small balance, so the account is a mishmash of funds that add up to a three-fund portfolio. I like Fido's funds better than Schwab's, but not enough to pay $50 to close out the Schwab account. It's a Roth IRA, so taxes aren't a consideration.

Iridium
Posts: 428
Joined: Thu May 19, 2016 10:49 am

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

Post by Iridium » Thu Aug 02, 2018 3:23 am

JDDS wrote:
Thu Aug 02, 2018 2:09 am
One of the things I never quite understood: Vanguard would encourage you to invest with them by keeping Admiral shares limited, primarily to their platform. Yet they are then making less income on your shares, while having to handle your customer service needs, I guess it works out in volume.
While we can be pretty sure that Vanguard never pays to be added to broker No Transaction Fee lists, are we certain that Vanguard never pays intermediaries any fees? I thought it was customary for funds to pay brokers to mail out proxies, annual reports and such. I wonder if these fees are higher than what Vanguard can do on its own, especially given how hard Vanguard pushes edelivery.

The weird thing is that they offer Admiral ERs in their ETFs, so it is not as if they keep the good stuff exclusively on their own platform, but, perhaps ETFs have less processing expense than the equivalent mutual fund when held elsewhere. Of course, at Vanguard, such expenses would be the same whether packaged as mutual fund or ETF, hence Admiral shares.

DippityDoo
Posts: 124
Joined: Mon May 29, 2017 6:06 pm

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

Post by DippityDoo » Thu Aug 02, 2018 3:32 am

gostars wrote:
Thu Aug 02, 2018 2:38 am
Curious what others have managed to get out of Fidelity in terms of rebating account transfer/closure fees and maybe tossing in a few free trades on low-value accounts.
My transfer to Fidelity wasn't a small account so I got some goodies. But I learned in the process that their reps have flexibility in what they offer. As I recall, I got more visiting a local office in person than calling the national number on the web site. Is there a Fido branch near you?

gostars
Posts: 439
Joined: Mon Oct 09, 2017 7:53 pm

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

Post by gostars » Thu Aug 02, 2018 4:05 am

DippityDoo wrote:
Thu Aug 02, 2018 3:32 am
gostars wrote:
Thu Aug 02, 2018 2:38 am
Curious what others have managed to get out of Fidelity in terms of rebating account transfer/closure fees and maybe tossing in a few free trades on low-value accounts.
My transfer to Fidelity wasn't a small account so I got some goodies. But I learned in the process that their reps have flexibility in what they offer. As I recall, I got more visiting a local office in person than calling the national number on the web site. Is there a Fido branch near you?
Yes, but said family member is half the country away and not really familiar enough with the minutiae to negotiate this sort of thing. I don't even want to bring it up unless there's a reasonable chance that it will accomplish something.


motorcyclesarecool
Posts: 684
Joined: Sun Dec 14, 2014 7:39 am

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

Post by motorcyclesarecool » Thu Aug 02, 2018 5:53 am

FIREchief wrote:
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 wanted to bump this post and see if anyone could give answers / reasoning.

Might there be an opportunity for arbitrage over the weekend? 8-)
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.

scone
Posts: 1455
Joined: Wed Jul 11, 2012 4:46 pm

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

Post by scone » Thu Aug 02, 2018 6:06 am

Very cool. As a Fido customer, all I have to do is stand there and save money. And given the fierce competition out there, we should all benefit. Just for giggles, I’d like to figure out how much money I’m saving, but I’m not sure how to do that.
"My bond allocation is the amount of money that I cannot afford to lose." -- Taylor Larimore

selters
Posts: 644
Joined: Thu Feb 27, 2014 9:26 am

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

Post by selters » Thu Aug 02, 2018 6:15 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.
1-2 for large caps and 5-7 for small caps is what Vanguard and iShares make. Since large caps are 85% of the market and small caps 15%, 4 to 5 bps for TSM sounds high.

Post Reply