With expense-free funds, are other Fidelity fund obsolete?

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InvestInLife
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With expense-free funds, are other Fidelity fund obsolete?

Post by InvestInLife » Tue Sep 18, 2018 11:47 am

With new Fidelity total US and total international expense-free funds, are other similar Fidelity funds such as FSTVX and FTIPX obsolete?

To put it another way — is there any good reason for new investors to buy into the old funds, or for current investors to not switch the entirety of their holdings over to the new funds?

Any guesses as to whether Fidelity will drop expense fees for other funds in time?

lukestuckenhymer
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Re: With expense-free funds, are other Fidelity fund obsolete?

Post by lukestuckenhymer » Tue Sep 18, 2018 11:49 am

One would think so... I would have much rather they dropped the ER of FSTVX to zero since I'm stuck there with large capital gains :(

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nisiprius
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Re: With expense-free funds, are other Fidelity fund obsolete?

Post by nisiprius » Tue Sep 18, 2018 11:59 am

Both Fidelity and Vanguard's fund lineup has gotten cluttered up with old funds that that seem to have been superseded by new! improved! funds. A Vanguard example is the Vanguard FTSE All-World Ex-US fund, VFWIX, and the Vanguard Total International Stock Index Fund, VGTSX.

I don't know the reasons for this. I imagine that there is, basically, no reason to annoy owners of the old fund by terminating it. You'd think they might try to clarify things by saying something like "FTIPX has been superseded by FZILX" but perhaps that poses problems of its own.
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mervinj7
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Re: With expense-free funds, are other Fidelity fund obsolete?

Post by mervinj7 » Tue Sep 18, 2018 12:19 pm

lukestuckenhymer wrote:
Tue Sep 18, 2018 11:49 am
One would think so... I would have much rather they dropped the ER of FSTVX to zero since I'm stuck there with large capital gains :(
They did drop your FSTVX fees to 0.015% ER (that's ultra-low!!!). I actually prefer that to 0.0% since 0.015% covers their costs for this fund (no fee waivers in the prospectus for FSKAX); thus, it's not a loss-leader like the new ZERO funds with the intention of pulling new clients to Fidelity.

The "old" index funds have been greatly reduced in complexity since there will only be one share class after November 2018. For example, last month Fidelity had 4 share classes for its Total Market Index Fund (FSTMX FSTVX FSKTX FSKAX). In two months, there will only be one surviving share class (FSKAX) with one ER (0.015%) and no minimum. To me, that's far more valuable then any gimmicky ZERO funds.

rkhusky
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Re: With expense-free funds, are other Fidelity fund obsolete?

Post by rkhusky » Tue Sep 18, 2018 12:22 pm

nisiprius wrote:
Tue Sep 18, 2018 11:59 am
Both Fidelity and Vanguard's fund lineup has gotten cluttered up with old funds that that seem to have been superseded by new! improved! funds. A Vanguard example is the Vanguard FTSE All-World Ex-US fund, VFWIX, and the Vanguard Total International Stock Index Fund, VGTSX.

I don't know the reasons for this. I imagine that there is, basically, no reason to annoy owners of the old fund by terminating it. You'd think they might try to clarify things by saying something like "FTIPX has been superseded by FZILX" but perhaps that poses problems of its own.
VFWIX is large cap and there is a corresponding small cap fund.

Perhaps Fidelity is waiting to see how the zero cost funds turn out, given that they will be following a new index. Plus there may be other negatives to the funds that some investors might not accept.

arf30
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Re: With expense-free funds, are other Fidelity fund obsolete?

Post by arf30 » Tue Sep 18, 2018 12:47 pm

Until these mutual funds are as tax efficient as ETFs and Vanguard mutual funds I don't think other funds will be obsolete for investing in taxable accounts.

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triceratop
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Re: With expense-free funds, are other Fidelity fund obsolete?

Post by triceratop » Tue Sep 18, 2018 12:49 pm

For one thing, the new funds are not currently available in every account type so the answer is most definitely no.

And yeah, tax efficiency. Also, some people like ETFs.
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Earl Lemongrab
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Re: With expense-free funds, are other Fidelity fund obsolete?

Post by Earl Lemongrab » Tue Sep 18, 2018 2:19 pm

At least for now, the zero funds can only be held at Fidelity. That includes, apparently, things like donating appreciated shares. For those of us who favor mobility and flexibility, ETFs fit the bill better.
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