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

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

Post by aristotelian » Thu Aug 02, 2018 6:30 am

Last I checked, I can still get $300/$100,000 transfer to TD/Schwab. It would be a while before moving to Fidelity would pay for itself. Still cool.

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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 » Thu Aug 02, 2018 7:07 am

motorcyclesarecool wrote:
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-)

FSTVX is dropping to 0.015% ER, moving to save 0.015% when you likely will have to pay taxes seems unlikely.

FSTVX is likely in many 401K plans where FZROX won't be available day 1.

In short, it seems very unlikely. You are hypothesizing a "bank run" of sorts over savings of $150 on $1M, or $1.50 on $10K. Almost everyone will have taxes in excess of that amount.

Further, expense ratios are just part of the story FZROX is tracking a Fido-created index that may or may not be as good as FSTVX's and so forth. Honestly, once ERs get down below 25 bp, and certainly, below 10 bp, other things like tax efficiency, securities lending income, and more can be a much bigger concerns.

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

Post by lostdog » Thu Aug 02, 2018 7:14 am

Just my opinion. Before anyone makes a move from Vanguard to Fidelity maybe wait 4 to 6 months to see if Vanguard will respond to this. Also wait and see how the new Fidity index funds will pan out for a few months. I'm a bit skeptical because these funds are Fidelity's own indexes and how tax efficient they will be.

I am also hoping this forces Vaguard Total World index into Admiral shares but this is a slim chance.

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

Post by moehoward » Thu Aug 02, 2018 7:27 am

This is a win win for all the investors on Bogleheads. Incremental gains...

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

Post by Spedward » Thu Aug 02, 2018 7:39 am

Forgive me if someone else already raised this point, and forgive me if I am wrong - but I feel like I need to call BS.

These are fund of funds - aka its a feeder fund that simply invest in underlying fidelity funds, funds that carry an expense ratio. So although the fund you are investing in may not have an expense ratio, you would still incur the expenses from the underlying fund it invest in. Perhaps one could say is it is an off balance sheet arrangement.

This is one of the reasons I do not like target date funds. The expense advertising can be misleading (although likely disclosed in full in the proxy I would assume) given you still are investing in underlying funds that carry an expense ratio. There you are getting hit with expenses twice. Here I guess the good thing is at least they got rid of the second layer of expenses.

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

Post by obafgkm » Thu Aug 02, 2018 7:45 am

JDDS wrote:
Thu Aug 02, 2018 2:09 am
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.
That reminds me of one of my favorite Saturday Night Live commercials, for First CitiWide Change Bank. The bit is multipart.

"'How do you make money doing this?' The answer is simple. Volume."

Here is the first part.

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

Post by Jack FFR1846 » Thu Aug 02, 2018 7:46 am

Abigail Johnson wouldn't allow a "loss leader" to exist. She just wouldn't. I have heard for years here that everyone, except Vanguard uses loss leaders for....I don't know what reason. That's a bunch of BS. What I do believe is that Schwab, Fidelity and TDA are far more efficient in their operations, so can run with less waste, find other ways to make money within each fund and be very profitable without limiting their support times to coincide with banker's hours.

I also don't think this drop has anything to do with anything Vanguard has recently done. In the low cost world, Vanguard is history. Yah, they were the first to go to low cost investing, but Oldsmobile was the oldest existing car company until recently. So what? I think the mass campaign of Schwab pushed Fidelity here. These two are far more direct competitors. Great customer service 24/7, decent websites (I personally like TDA's best), lower cost than anyone.

Personally, I am going to wait a bit to see what's what when the dust clears. Fidelity's international fund has been lower than Vanguard's developed international for a while...it's the only fund I have at Vanguard. I'm going to have to do my own diligence and comparisons, but can certainly see myself moving all my Vanguard money over to Fidelity. I think Schwab will be the first to match this with SCHB and SCHX, which will keep me there. But if not, I may also abandon Schwab and move my taxable account over to Abigail.
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Outafter20
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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by Outafter20 » Thu Aug 02, 2018 7:56 am

Jack FFR1846 wrote:
Thu Aug 02, 2018 7:46 am
Abigail Johnson wouldn't allow a "loss leader" to exist. She just wouldn't. I have heard for years here that everyone, except Vanguard uses loss leaders for....I don't know what reason. That's a bunch of BS. What I do believe is that Schwab, Fidelity and TDA are far more efficient in their operations, so can run with less waste, find other ways to make money within each fund and be very profitable without limiting their support times to coincide with banker's hours.
I don't think this will be a loss leader, they will just make less off of these products. I think this is a way to get new customers in the door and up-sell them (AUM, active funds, etc.). Just like the 1800 commission free ETFs that Vanguard will be offering. I believe that when that is finally up and running, when one goes to research or place an order for say ITOT, a message will appear that will say something along the lines of "Did you know that Vanguard offers VTI..." It does that now when you compare a mutual fund or ETF to one of Vanguard's products.

wolf359
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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by wolf359 » Thu Aug 02, 2018 8:04 am

baliktad wrote:
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.
Thank you for the correction. I was seeing that in other people commenting, and hadn't read the prospectus.

For those with IRAs, this changes the equation more in favor of Fidelity, because tax efficiency is irrelevant. It also allows significantly more money to use the Zero funds. There's no capital gains cost to switch tax advantaged funds from Vanguard to Fidelity.

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

Post by dsmil » Thu Aug 02, 2018 8:07 am

I'm going to wait and see if Vanguard counters but what Fidelity is offering is very compelling. They are consistently beating Vanguard's Admiral Funds without any minimums! As someone who has some investor level funds, the savings will be even greater.

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

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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 » Thu Aug 02, 2018 8:10 am

Jack FFR1846 wrote:
Thu Aug 02, 2018 7:46 am
In the low cost world, Vanguard is history. Yah, they were the first to go to low cost investing, but Oldsmobile was the oldest existing car company until recently. So what? I think the mass campaign of Schwab pushed Fidelity here.
A key difference is Oldsmobile died because of poor sales. Vanguard is growing far faster than its competitors, at least that's what I have been reading about in the financial press. Or is this fake news?
https://www.investopedia.com/news/vangu ... during-q1/
https://www.nytimes.com/2017/04/14/busi ... rowth.html

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

Post by CyclingDuo » Thu Aug 02, 2018 8:15 am

moehoward wrote:
Thu Aug 02, 2018 7:27 am
This is a win win for all the investors on Bogleheads. Incremental gains...
Mic drop!
:sharebeer


Yours was the best post in the entire thread and sums up 5+ pages of "blah, blah, blah, blah.....!"
"Everywhere is within walking distance if you have the time." ~ Steven Wright

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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 » Thu Aug 02, 2018 8:24 am

aristotelian wrote:
Thu Aug 02, 2018 6:30 am
Last I checked, I can still get $300/$100,000 transfer to TD/Schwab. It would be a while before moving to Fidelity would pay for itself. Still cool.
$300? Chump change! Transfer $1M and get $2,500.

https://www.doughroller.net/investing/b ... d-bonuses/

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

Post by Mountain Doc » Thu Aug 02, 2018 8:35 am

Spedward wrote:
Thu Aug 02, 2018 7:39 am
Forgive me if someone else already raised this point, and forgive me if I am wrong - but I feel like I need to call BS.

These are fund of funds - aka its a feeder fund that simply invest in underlying fidelity funds, funds that carry an expense ratio. So although the fund you are investing in may not have an expense ratio, you would still incur the expenses from the underlying fund it invest in. Perhaps one could say is it is an off balance sheet arrangement.

This is one of the reasons I do not like target date funds. The expense advertising can be misleading (although likely disclosed in full in the proxy I would assume) given you still are investing in underlying funds that carry an expense ratio. There you are getting hit with expenses twice. Here I guess the good thing is at least they got rid of the second layer of expenses.
I'm pretty sure you are wrong on both accounts. It looks like the ZERO funds will be directly tracking new proprietary Fidelity indexes; I haven't seen any mention of them being fund-of-funds. If you have seen that they will be fund-of-funds, can you provide the link?

As for fund-of-fund expenses, I believe since 2007 fees from the underlying funds have to be reported in the total expenses of the wrapper fund (and designated in the prospectus as acquired fund fees and expenses). Please correct me if I'm wrong.

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

Post by jhfenton » Thu Aug 02, 2018 8:45 am

Spedward wrote:
Thu Aug 02, 2018 7:39 am
Forgive me if someone else already raised this point, and forgive me if I am wrong - but I feel like I need to call BS.

These are fund of funds - aka its a feeder fund that simply invest in underlying fidelity funds, funds that carry an expense ratio. So although the fund you are investing in may not have an expense ratio, you would still incur the expenses from the underlying fund it invest in. Perhaps one could say is it is an off balance sheet arrangement.

This is one of the reasons I do not like target date funds. The expense advertising can be misleading (although likely disclosed in full in the proxy I would assume) given you still are investing in underlying funds that carry an expense ratio. There you are getting hit with expenses twice. Here I guess the good thing is at least they got rid of the second layer of expenses.
Funds of funds have to include acquired funds expenses in their own reported expenses ratios. Headline expense ratios cannot legally be misleading in the way you describe.

vu8
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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by vu8 » Thu Aug 02, 2018 9:03 am

So on paper is the fidelity zero fund beating vanguard total stock market on emery single aspect?

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

Post by PalmQueen » Thu Aug 02, 2018 9:14 am

Not mentioned on the news with all the hype of ZERO, Fido's now charging $49.95 per purchase of non-Fidelity MFs.

It looks like there will still be a selection of $0 fee non-Fidelity MFs, but for the rest the sales fee goes from $4.95 to $49.95.
For the non-BH theory investor using Fido, that will drive a lot of business into their own funds.

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

Post by jminv » Thu Aug 02, 2018 9:22 am

aristotelian wrote:
Thu Aug 02, 2018 6:30 am
Last I checked, I can still get $300/$100,000 transfer to TD/Schwab. It would be a while before moving to Fidelity would pay for itself. Still cool.
Fidelity will match Etrade/TD/Schwab offers, you have to call. So you would get the $300 for 100k.

I confirmed with Fidelity a week and a half ago that they would do $2500 for 1-2.5mil, $3500 for 2.5-5mil, $5000 for 5+mil.

Bodhi312
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Re: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds)

Post by Bodhi312 » Thu Aug 02, 2018 9:25 am

PalmQueen wrote:
Thu Aug 02, 2018 9:14 am
Not mentioned on the news with all the hype of ZERO, Fido's now charging $49.95 per purchase of non-Fidelity MFs.

It looks like there will still be a selection of $0 fee non-Fidelity MFs, but for the rest the sales fee goes from $4.95 to $49.95.
For the non-BH theory investor using Fido, that will drive a lot of business into their own funds.
Fidelity/Vanguard/Schwab all make certain funds (with specific share classes) available with no transaction fees, while other non-in-house funds carry a transaction fee. I’m not aware of any brokerage that offers all non-house funds without a transaction fee. In fact Vanguard charges a small fee on some of its mutual funds (albeit relatively small fees, and fees that go to the funds themselves), but Fidelity is hardly alone in this.

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

Post by yougotitdude » Thu Aug 02, 2018 9:36 am

Fidelity has charged the $50 (or $75) for TF mutual funds for years.

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

Post by dh » Thu Aug 02, 2018 9:45 am

Spedward wrote:
Thu Aug 02, 2018 7:39 am
Forgive me if someone else already raised this point, and forgive me if I am wrong - but I feel like I need to call BS.

These are fund of funds - aka its a feeder fund that simply invest in underlying fidelity funds, funds that carry an expense ratio. So although the fund you are investing in may not have an expense ratio, you would still incur the expenses from the underlying fund it invest in. Perhaps one could say is it is an off balance sheet arrangement.

This is one of the reasons I do not like target date funds. The expense advertising can be misleading (although likely disclosed in full in the proxy I would assume) given you still are investing in underlying funds that carry an expense ratio. There you are getting hit with expenses twice. Here I guess the good thing is at least they got rid of the second layer of expenses.
I must have missed that these are "funds of funds" that each carry an expense ratios. The only thing I have read is that these are broad market index funds (I assumed the US was the same holding as Vanguards Total Stock Market Index). So you are saying that the Fidelity Total US is comprised of a large cap, mid cap, small cap US funds that each have expense ratios? Thank you in advance for clarifying.

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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 » Thu Aug 02, 2018 9:52 am

dh wrote:
Thu Aug 02, 2018 9:45 am
Spedward wrote:
Thu Aug 02, 2018 7:39 am
Forgive me if someone else already raised this point, and forgive me if I am wrong - but I feel like I need to call BS.

These are fund of funds - aka its a feeder fund that simply invest in underlying fidelity funds, funds that carry an expense ratio. So although the fund you are investing in may not have an expense ratio, you would still incur the expenses from the underlying fund it invest in. Perhaps one could say is it is an off balance sheet arrangement.

This is one of the reasons I do not like target date funds. The expense advertising can be misleading (although likely disclosed in full in the proxy I would assume) given you still are investing in underlying funds that carry an expense ratio. There you are getting hit with expenses twice. Here I guess the good thing is at least they got rid of the second layer of expenses.
I must have missed that these are "funds of funds" that each carry an expense ratios. The only thing I have read is that these are broad market index funds (I assumed the US was the same holding as Vanguards Total Stock Market Index). So you are saying that the Fidelity Total US is comprised of a large cap, mid cap, small cap US funds that each have expense ratios? Thank you in advance for clarifying.
No this is not true at all. These new Zero funds are not fund of funds, and that's not even how ER of fund of funds work.

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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 » Thu Aug 02, 2018 9:53 am

PalmQueen wrote:
Thu Aug 02, 2018 9:14 am
Not mentioned on the news with all the hype of ZERO, Fido's now charging $49.95 per purchase of non-Fidelity MFs.

It looks like there will still be a selection of $0 fee non-Fidelity MFs, but for the rest the sales fee goes from $4.95 to $49.95.
For the non-BH theory investor using Fido, that will drive a lot of business into their own funds.
Perhaps it hasn't been mentioned because its not true?

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

Post by student » Thu Aug 02, 2018 10:00 am

PalmQueen wrote:
Thu Aug 02, 2018 9:14 am
Not mentioned on the news with all the hype of ZERO, Fido's now charging $49.95 per purchase of non-Fidelity MFs.

It looks like there will still be a selection of $0 fee non-Fidelity MFs, but for the rest the sales fee goes from $4.95 to $49.95.
For the non-BH theory investor using Fido, that will drive a lot of business into their own funds.
$4.95 is for stock. Non-Fidelity mutual funds are divided into two categories. No transaction fee and with transaction fee. It is $0 to trade mutual funds in the first category as Fidelity is being compensated directly by the underlying mutual fund companies. In the second category, there is a fee $49+ to buy but $0 to sell. I do not think there were any changes in these two categories.

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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 » Thu Aug 02, 2018 10:10 am

lostdog wrote:
Thu Aug 02, 2018 7:14 am
I am also hoping this forces Vaguard Total World index into Admiral shares but this is a slim chance.
If this is what you're hoping for, contact Vanguard and ask them to pass that along to the managers of that 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 Darth Xanadu » Thu Aug 02, 2018 10:13 am

MnD wrote:
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.
I think this is a good point, and valid. I honestly don't see a huge exodus from other brokerages to Fidelity. I opened my taxable account at Fidelity even though they were not the cheapest, largely due to the reasons stated above.
"A courageous teacher, failure is."

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

Post by supernova » Thu Aug 02, 2018 10:23 am

My issue with the international version of it is that, according to the prospectus, it doesn't include small caps.

I'd prefer to pay 0.06% more to include small-caps.

As for the US stock market version, it's 0.015% versus 0%. Not a huge difference unless you have a lot in it. $1.50 per every $10k invested.

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

Post by evofxdwg » Thu Aug 02, 2018 10:26 am

1030danielle wrote:
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
Wow! That's eye opening! The misses and I are exclusive to Vanguard and hold several of those funds. I need to do some research on this over the next few months to ID any negatives of changing companies.

I assume a lot of us, like me, have a soft spot for Vanguard due to their heritage. Is sentimental loyalty a valid reason to invest at one company versus another even if it costs a few more bucks? :confused

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

Post by Ricola » Thu Aug 02, 2018 10:41 am

1030danielle wrote:
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
Any competition for Vanguard's Balanced Index Fund Adm (VBIAX)?

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

Post by evofxdwg » Thu Aug 02, 2018 10:42 am

smectym wrote:
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
:D Sometimes reading bogleheads is quite entertaining!

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

Post by Vulcan » Thu Aug 02, 2018 10:45 am

Total Stock Market/Total Intl is old news.

Total World is where it's at, and for all my preference for MFs over ETFs, VT is hard to beat for maintenance-free stock holding (Admiral shares would be nice though).

0.1% is well within the range of tracking error and is not worth further attempts to optimize, especially since Fidelity's international fund has no small caps.
If you torture the data long enough, it will confess to anything. ~Ronald Coase

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

Post by Whakamole » Thu Aug 02, 2018 10:46 am

supernova wrote:
Thu Aug 02, 2018 10:23 am
My issue with the international version of it is that, according to the prospectus, it doesn't include small caps.

I'd prefer to pay 0.06% more to include small-caps.

As for the US stock market version, it's 0.015% versus 0%. Not a huge difference unless you have a lot in it. $1.50 per every $10k invested.
It went down 2bp, so $2 for every $10K invested. It adds up depending on how much you have invested.

My annual fees went down ~$80 yesterday, and Fidelity funds are not a big part of my portfolio.

I agree about preferring inclusion of small caps, and here are my calculations:
- VTIAX (Total International) is 11 basis points, and includes everything (developed/emerging, large/small cap)
- Constructing this with 90% FZILX (Zero International, 0 bp)/10% VSS (Vanguard Intl Small-Cap, 13bp) will cost 1.3bp. This also will include everything, in the correct ratio per https://www.bogleheads.org/wiki/Approxi ... ock_market

Even if you buy FTIPX (Total International), 6bp already effectively eliminates previous concerns about the higher cost of international index funds. 1.3bp? My S&P 500 CIT costs about that.

There may be tax concerns but with this strategy. Perhaps FZILX/VSS would be best held in tax-advantaged accounts, and taxable used for domestic stock (or even bonds as has been recently argued by WCI.)

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

Post by sco » Thu Aug 02, 2018 10:56 am

With the recent update to 1.5 Basis points of the other TSM fund, these "Free" funds aren't that exciting.

On one had I could save $100-150 per year, on the other hand isn't there always tracking error when a fund starts?

This is across many accounts including 401k where I Have Brokeragelink and can buy whatever I like.

I still like ITOT for taxable.

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

Post by dh » Thu Aug 02, 2018 11:02 am

Nate79 wrote:
Thu Aug 02, 2018 9:52 am
dh wrote:
Thu Aug 02, 2018 9:45 am
Spedward wrote:
Thu Aug 02, 2018 7:39 am
Forgive me if someone else already raised this point, and forgive me if I am wrong - but I feel like I need to call BS.

These are fund of funds - aka its a feeder fund that simply invest in underlying fidelity funds, funds that carry an expense ratio. So although the fund you are investing in may not have an expense ratio, you would still incur the expenses from the underlying fund it invest in. Perhaps one could say is it is an off balance sheet arrangement.

This is one of the reasons I do not like target date funds. The expense advertising can be misleading (although likely disclosed in full in the proxy I would assume) given you still are investing in underlying funds that carry an expense ratio. There you are getting hit with expenses twice. Here I guess the good thing is at least they got rid of the second layer of expenses.
I must have missed that these are "funds of funds" that each carry an expense ratios. The only thing I have read is that these are broad market index funds (I assumed the US was the same holding as Vanguards Total Stock Market Index). So you are saying that the Fidelity Total US is comprised of a large cap, mid cap, small cap US funds that each have expense ratios? Thank you in advance for clarifying.
No this is not true at all. These new Zero funds are not fund of funds, and that's not even how ER of fund of funds work.
Thanks, Nate. I didn't think so from what I read; however, if it were true then that would have negated any benefit. All companies are becoming aware of how important fees are to returns. I am not a Fidelity participant, but kudos to them!

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

Post by student » Thu Aug 02, 2018 11:04 am

Vulcan wrote:
Thu Aug 02, 2018 10:45 am
Total Stock Market/Total Intl is old news.

Total World is where it's at, and for all my preference for MFs over ETFs, VT is hard to beat for maintenance-free stock holding (Admiral shares would be nice though).

0.1% is well within the range of tracking error and is not worth further attempts to optimize, especially since Fidelity's international fund has no small caps.
Although Fidelity's International has no small caps, I believe the newer Total International does have small cap.

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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 » Thu Aug 02, 2018 11:13 am

smectym wrote:
Wed Aug 01, 2018 7:08 pm

If we liked Vanguard back when it was "cheapest," and now Acme is "cheapest," we should now like Acme better than Vanguard.

Smectym
Just because we liked Vanguard when it was the cheapest, doesn't mean we loved it BECAUSE it was the cheapest.

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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 11:17 am

Newbie question here: If a funds ER changes, do existing owners of shares receive that lower ER? Is this uniform across all funds/ETFs and all companies?

That's a great point about waiting to withdraw funds from competitor accounts such as SCHB and SCHF - there won't be much lost in the next few months, except if there is another streak of capital appreciation then withdrawing will just generate even more capital gains.

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

Post by supernova » Thu Aug 02, 2018 11:33 am

student wrote:
Thu Aug 02, 2018 11:04 am
Vulcan wrote:
Thu Aug 02, 2018 10:45 am
Total Stock Market/Total Intl is old news.

Total World is where it's at, and for all my preference for MFs over ETFs, VT is hard to beat for maintenance-free stock holding (Admiral shares would be nice though).

0.1% is well within the range of tracking error and is not worth further attempts to optimize, especially since Fidelity's international fund has no small caps.
Although Fidelity's International has no small caps, I believe the newer Total International does have small cap.
Correct, but the 0% fee one will be large and mid, according to its prospectus

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

Post by mervinj7 » Thu Aug 02, 2018 11:52 am

frankmorris wrote:
Thu Aug 02, 2018 11:17 am
Newbie question here: If a funds ER changes, do existing owners of shares receive that lower ER? Is this uniform across all funds/ETFs and all companies?

That's a great point about waiting to withdraw funds from competitor accounts such as SCHB and SCHF - there won't be much lost in the next few months, except if there is another streak of capital appreciation then withdrawing will just generate even more capital gains.
If a specific fund's ER changes you will get the most up to date ER for your share class as per the SEC filing and prospectus.

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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 » Thu Aug 02, 2018 11:53 am

frankmorris wrote:
Thu Aug 02, 2018 11:17 am
Newbie question here: If a funds ER changes, do existing owners of shares receive that lower ER? Is this uniform across all funds/ETFs and all companies?
All investors in a fund of the same share class pay the same ER and receive the lower ER when the fee is cut.
"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 student » Thu Aug 02, 2018 11:54 am

supernova wrote:
Thu Aug 02, 2018 11:33 am
student wrote:
Thu Aug 02, 2018 11:04 am
Vulcan wrote:
Thu Aug 02, 2018 10:45 am
Total Stock Market/Total Intl is old news.

Total World is where it's at, and for all my preference for MFs over ETFs, VT is hard to beat for maintenance-free stock holding (Admiral shares would be nice though).

0.1% is well within the range of tracking error and is not worth further attempts to optimize, especially since Fidelity's international fund has no small caps.
Although Fidelity's International has no small caps, I believe the newer Total International does have small cap.
Correct, but the 0% fee one will be large and mid, according to its prospectus
ok. I wasn't sure whether Vulcan was referring to the ZERO version or the existing International.

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

Post by lukestuckenhymer » Thu Aug 02, 2018 12:10 pm

smectym wrote:
Wed Aug 01, 2018 7:08 pm

If we liked Vanguard back when it was "cheapest," and now Acme is "cheapest," we should now like Acme better than Vanguard.

Smectym
We also like Vanguard (and continue to do so) because of its distribution structure and how we never see/pay taxes on LTCG distributions.

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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 » Thu Aug 02, 2018 12:21 pm

scone wrote:
Thu Aug 02, 2018 6:06 am
Very cool. As a Fido customer, all I have to do is stand there and save money. :sharebeer 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.

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

Post by cj2018 » Thu Aug 02, 2018 12:26 pm

Broken Man 1999 wrote:
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
Same here. No idea why some BHs are going nuts about this.

Let's look at the big and fundamental picture here. Vanguard as a company is investor/fund-owned. Plain and Simple.

Remember, no one can serve 2 masters! Fidelity will make you pay one way or another.
Last edited by cj2018 on Thu Aug 02, 2018 12:28 pm, edited 1 time in total.

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

Post by lostdog » Thu Aug 02, 2018 12:27 pm

Vulcan wrote:
Thu Aug 02, 2018 10:45 am
Total Stock Market/Total Intl is old news.

Total World is where it's at, and for all my preference for MFs over ETFs, VT is hard to beat for maintenance-free stock holding (Admiral shares would be nice though).

0.1% is well within the range of tracking error and is not worth further attempts to optimize, especially since Fidelity's international fund has no small caps.
+1

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

Post by cj2018 » Thu Aug 02, 2018 12:33 pm

Spedward wrote:
Thu Aug 02, 2018 7:39 am
Forgive me if someone else already raised this point, and forgive me if I am wrong - but I feel like I need to call BS.

These are fund of funds - aka its a feeder fund that simply invest in underlying fidelity funds, funds that carry an expense ratio. So although the fund you are investing in may not have an expense ratio, you would still incur the expenses from the underlying fund it invest in. Perhaps one could say is it is an off balance sheet arrangement.

This is one of the reasons I do not like target date funds. The expense advertising can be misleading (although likely disclosed in full in the proxy I would assume) given you still are investing in underlying funds that carry an expense ratio. There you are getting hit with expenses twice. Here I guess the good thing is at least they got rid of the second layer of expenses.
I sense this too. 0% ER means nothing if they are FoFs and own underlying securities with huge costs or are some other high ER funds.

Remember, no one can serve 2 masters! How do people think Fidelity & Co shareowners pay for their lunch? lol

I'd take Vanguard's ownership structure to clear out all these noises/tactics from other non-fundowner-owned companies.

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

Post by student » Thu Aug 02, 2018 12:37 pm

cj2018 wrote:
Thu Aug 02, 2018 12:26 pm
Remember, no one can serve 2 masters! Fidelity will make you pay one way or another.
Someone will pay but it is not necessarily you. It is like credit card rewards, someone is subsidizing you if you pay in full every month.

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

Post by cj2018 » Thu Aug 02, 2018 12:48 pm

student wrote:
Thu Aug 02, 2018 12:37 pm
cj2018 wrote:
Thu Aug 02, 2018 12:26 pm
Remember, no one can serve 2 masters! Fidelity will make you pay one way or another.
Someone will pay but it is not necessarily you. It is like credit card rewards, someone is subsidizing you if you pay in full every month.
I know the point you are trying to make, but I'd say comparing investor to consumer is not the best analogy :)

What makes me roll my eye is Fidelity can always change the ER back up to non-zero in the future should they desire or market condition warrants (e.g. too many people in their $0 ER funds or they have hard time monetizing or upselling other paid-services or the underlying securities hold by the $0 ER funds are other high ER funds).

They are in the business of making money! Not making investor rich.

I have no sentimental attachment to Vanguard whatsoever - i simply buy its ownership structure and believe the system is superior in serving customers and owners who both happen to be the same person.

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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 » Thu Aug 02, 2018 12:51 pm

Somehow I think if Vanguard was offering 0% funds, we would mostly all agree that it's awesome and perfect in every way. I would still be asking where my brokerage bonus money is, though.

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

Post by Whakamole » Thu Aug 02, 2018 12:56 pm

cj2018 wrote:
Thu Aug 02, 2018 12:33 pm
I sense this too. 0% ER means nothing if they are FoFs and own underlying securities with huge costs or are some other high ER funds.

Remember, no one can serve 2 masters! How do people think Fidelity & Co shareowners pay for their lunch? lol

I'd take Vanguard's ownership structure to clear out all these noises/tactics from other non-fundowner-owned companies.
As others have said, fund-of-funds ER has to include the expense ratio of the underlying funds.
cj2018 wrote:
Thu Aug 02, 2018 12:48 pm
What makes me roll my eye is Fidelity can always change the ER back up to non-zero in the future should they desire or market condition warrants (e.g. too many people in their $0 ER funds or they have hard time monetizing or upselling other paid-services or the underlying securities hold by the $0 ER funds are other high ER funds).

They are in the business of making money! Not making investor rich.

I have no sentimental attachment to Vanguard whatsoever - i simply buy its ownership structure and believe the system is superior in serving customers and owners who both happen to be the same person.
Changes in funds can happen with fund company. Vanguard has raised ER on funds before, in fact they did it just last year. They've changed fund objectives before, like turning Tax Managed International into a non-tax managed fund, and now turning Precious Metals & Mining into something else entirely. There's no guarantee in life.

And of course if you own the fund in a tax-advantaged account, you can sell without tax consequences if they raise the rates.

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