Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October after

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MFInvestor
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Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October after

Post by MFInvestor » Mon Nov 26, 2018 10:58 am

"Fidelity’s zero-fee campaign spurs $6.6bn of inflows
Boston manager outsells Vanguard by more than 40% in October after aggressive price cuts"

Financial Times

I wonder when the last time Fidelity had larger monthly fund flows then Vanguard occurred?
It appears that investors are taking to Fidelity's new fee structure which is positive for all investors.
Vanguard's lowering of minimum investment amount on 38 index funds Admiral shares to $3,000 is seen as a response to Fidelity move.

https://www.ft.com/content/d8569037-98 ... 1e8168161d

"Fidelity Investments is winning the latest battle in the global asset management fee war after its aggressive summer price cuts fuelled a dramatic increase in sales.

The $2.5tn Boston-based manager disrupted the industry in August when it launched a series of zero-fee investment products, while also dropping the charges on all its index funds to historic lows and removing minimum investment requirements. Sales figures for October show it outsold Vanguard, its nearest rival, by more than 40 per cent in the US, with the two outpacing the rest of the pack.

Several of Fidelity’s best-selling funds in October were those whose fees were cut dramatically, according to figures from Morningstar, the data provider.


Last week Vanguard reduced the minimum investments on 38 index funds in its cheaper Admiral Shares range to $3,000 in a decision that was widely seen as a response to Fidelity’s move."

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by columbia » Mon Nov 26, 2018 11:01 am

Fidelity is half employee-owned, right?

That gives them a much larger base, in order to sell these new customers on other expensive and/or ill advised financial instruments.
If you leave your head in the sand for too long, you might get run over by a Jeep.

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by Pocanutin » Mon Nov 26, 2018 11:34 am

I believe that Fidelity is privately owned. I thought Vanguard was employee owned. Perhaps I'm wrong.

tj
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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by tj » Mon Nov 26, 2018 11:54 am

Pocanutin wrote:
Mon Nov 26, 2018 11:34 am
I believe that Fidelity is privately owned. I thought Vanguard was employee owned. Perhaps I'm wrong.
Vanguard is privately owned as well, by it's mutual funds.

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by uberme » Mon Nov 26, 2018 3:32 pm

Only thing I've noticed is wait times for customer service have gone up. :annoyed

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by greg24 » Mon Nov 26, 2018 3:43 pm

MFInvestor wrote:
Mon Nov 26, 2018 10:58 am
Vanguard's lowering of minimum investment amount on 38 index funds Admiral shares to $3,000 is seen as a response to Fidelity move.
Fidelity's zero campaign has drawn enormous coverage from financial news outlets.

I heard about Vanguard's response when people on this message board accidentally noticed it. There seems to have been very little coverage by the financial press.

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by Nate79 » Mon Nov 26, 2018 3:50 pm

Reality - Fidelity reduces fees on ton of index funds and launches zero fee fund offerings. This puts their index funds at the lowest cost in the industry and low minimums. They also added access to more iShare funds as no trading cost. They also launched an HSA account which will be a great, low cost option this industry has been waiting for.

Bogleheads response - This is just a way for Fidelity to get you into high cost active funds and advisory services. These slippery salesman will go to no ends to get your money. Stay away! Since they are not a mutual company they are out to get you.


Reality - Vanguard closes their Investor shares and lowers the minimum on Admiral funds thereby lowering the cost to investors. They also allowed access to these funds in individual 401k's.

Bogleheads response - Yippee! Woohoo! Let's throw a party. I can't believe they are reducing costs for the average investor. This just goes to show that they have your interest at heart. As a mutual company it is not surprising!

Yup, nothing changes around here. Fidelity and Schwab has lower cost offerings for a while now. But you wouldn't know that from the responses.

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by HEDGEFUNDIE » Mon Nov 26, 2018 3:55 pm

greg24 wrote:
Mon Nov 26, 2018 3:43 pm
MFInvestor wrote:
Mon Nov 26, 2018 10:58 am
Vanguard's lowering of minimum investment amount on 38 index funds Admiral shares to $3,000 is seen as a response to Fidelity move.
Fidelity's zero campaign has drawn enormous coverage from financial news outlets.

I heard about Vanguard's response when people on this message board accidentally noticed it. There seems to have been very little coverage by the financial press.
Vanguard doesn’t advertise.

Fidelity is splashing commercials for its Zero funds all over nationally televised football games.

Is it really any surprise that Fidelity is “winning” the AUM game?

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by J295 » Mon Nov 26, 2018 3:57 pm

More than 36 years with Fidelity and never a problem. Also have funds at Vanguard. In our experience, customer service at Fido is superior

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by greg24 » Mon Nov 26, 2018 3:59 pm

HEDGEFUNDIE wrote:
Mon Nov 26, 2018 3:55 pm
greg24 wrote:
Mon Nov 26, 2018 3:43 pm
MFInvestor wrote:
Mon Nov 26, 2018 10:58 am
Vanguard's lowering of minimum investment amount on 38 index funds Admiral shares to $3,000 is seen as a response to Fidelity move.
Fidelity's zero campaign has drawn enormous coverage from financial news outlets.

I heard about Vanguard's response when people on this message board accidentally noticed it. There seems to have been very little coverage by the financial press.
Vanguard doesn’t advertise.

Fidelity is splashing commercials for its Zero funds all over nationally televised football games.
I realize the two have completely different advertising philosophies.

But it still shows how good Fidelity is at PR, and how poor Vanguard is.

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by mervinj7 » Mon Nov 26, 2018 4:08 pm

Nate79 wrote:
Mon Nov 26, 2018 3:50 pm
Reality - Fidelity reduces fees on ton of index funds and launches zero fee fund offerings. This puts their index funds at the lowest cost in the industry and low minimums. They also added access to more iShare funds as no trading cost. They also launched an HSA account which will be a great, low cost option this industry has been waiting for.

Bogleheads response - This is just a way for Fidelity to get you into high cost active funds and advisory services. These slippery salesman will go to no ends to get your money. Stay away! Since they are not a mutual company they are out to get you.


Reality - Vanguard closes their Investor shares and lowers the minimum on Admiral funds thereby lowering the cost to investors. They also allowed access to these funds in individual 401k's.

Bogleheads response - Yippee! Woohoo! Let's throw a party. I can't believe they are reducing costs for the average investor. This just goes to show that they have your interest at heart. As a mutual company it is not surprising!

Yup, nothing changes around here. Fidelity and Schwab has lower cost offerings for a while now. But you wouldn't know that from the responses.
Haha. Thanks, Nate. Spot-on summary. I had a good laugh. :D

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by SavageAmusement » Mon Nov 26, 2018 4:17 pm

Nate79 wrote:
Mon Nov 26, 2018 3:50 pm
Reality - Fidelity reduces fees on ton of index funds and launches zero fee fund offerings. This puts their index funds at the lowest cost in the industry and low minimums. They also added access to more iShare funds as no trading cost. They also launched an HSA account which will be a great, low cost option this industry has been waiting for.

Bogleheads response - This is just a way for Fidelity to get you into high cost active funds and advisory services. These slippery salesman will go to no ends to get your money. Stay away! Since they are not a mutual company they are out to get you.


Reality - Vanguard closes their Investor shares and lowers the minimum on Admiral funds thereby lowering the cost to investors. They also allowed access to these funds in individual 401k's.

Bogleheads response - Yippee! Woohoo! Let's throw a party. I can't believe they are reducing costs for the average investor. This just goes to show that they have your interest at heart. As a mutual company it is not surprising!

Yup, nothing changes around here. Fidelity and Schwab has lower cost offerings for a while now. But you wouldn't know that from the responses.
Perfect! You nailed it.


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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by retiredjg » Mon Nov 26, 2018 4:36 pm

Nate79 wrote:
Mon Nov 26, 2018 3:50 pm
Bogleheads response - This is just a way for Fidelity to get you into high cost active funds and advisory services. These slippery salesman will go to no ends to get your money. Stay away! Since they are not a mutual company they are out to get you.
Well, maybe some BH made a response like that, but I really doubt that most folks feel that way. I think the fact that Fidelity is becoming more competitive in low cost investing is probably a good thing.

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by UpperNwGuy » Mon Nov 26, 2018 4:44 pm

When Fidelity made its announcement on August 1, I applauded them for putting some competition into the industry. They have certainly succeeded.

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by mptfan » Mon Nov 26, 2018 4:46 pm

UpperNwGuy wrote:
Mon Nov 26, 2018 4:44 pm
When Fidelity made its announcement on August 1, I applauded them for putting some competition into the industry. They have certainly succeeded.
Some competition was put into the industry in 1974 when John Bogle founded Vanguard.

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by harvestbook » Mon Nov 26, 2018 4:47 pm

Fine with me. I'd just as soon Vanguard not grow too large and they now have some time to attend to customer service.

We were going to use Fido for our new 401ks. Vanguard adding admiral shares to 401k is enough to keep mine there because of electronic contributions, simplicity (most of our funds are there), and Roth 401k option. We'll transfer our HSA to Fido. All good.
Last edited by harvestbook on Mon Nov 26, 2018 4:49 pm, edited 1 time in total.
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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by UpperNwGuy » Mon Nov 26, 2018 4:48 pm

mptfan wrote:
Mon Nov 26, 2018 4:46 pm
UpperNwGuy wrote:
Mon Nov 26, 2018 4:44 pm
When Fidelity made its announcement on August 1, I applauded them for putting some competition into the industry. They have certainly succeeded.
Some competition was put into the industry in 1974 when John Bogle founded Vanguard.
Yes, but that was long, long ago....

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by Cycle » Mon Nov 26, 2018 5:02 pm

In general, I try to not be an early adopter. I'm waiting to see the actual cost and performance of vtsax vs. fidelity zero after a year... Same for vtiax. If they are equivalent, and the market hasn't gone up substantially since I last tax loss harvested I'll go to the fund with best performance after fees, including tax efficiency.

Vanguard is lowering their total world fee, so that's another bone they are throwing us investors.
Never look back unless you are planning to go that way

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by Spirit Rider » Mon Nov 26, 2018 5:55 pm

UpperNwGuy wrote:
Mon Nov 26, 2018 4:48 pm
mptfan wrote:
Mon Nov 26, 2018 4:46 pm
UpperNwGuy wrote:
Mon Nov 26, 2018 4:44 pm
When Fidelity made its announcement on August 1, I applauded them for putting some competition into the industry. They have certainly succeeded.
Some competition was put into the industry in 1974 when John Bogle founded Vanguard.
Yes, but that was long, long ago....
And Fidelity index funds started becoming cost competitive with Vanguard twenty years ago and on average had the edge for the last ten years. The biggest advantage that Vanguard has had recently was their breadth of index fund offerings. However, for the average investor there are more than enough asset classes at Fidelity to construct a good portfolio.

For the ultimate slice and dicer, Fidelity does lack a small value index fund and a variety bond index funds. The latter is much less important, because bond funds have shown a much better track record of neutral -> small Alpha performance.

The industry owes John Bogle a debt of gratitude, but in my opinion Vanguard has been increasingly resting on his laurels.

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by gtwhitegold » Mon Nov 26, 2018 9:51 pm

This is why I was disappointed that there weren't more of the iShares Edge Multifactor Funds added. ISCF and EMGF would definitely be appreciated by me and some other tilters I'm sure.
Spirit Rider wrote:
Mon Nov 26, 2018 5:55 pm
UpperNwGuy wrote:
Mon Nov 26, 2018 4:48 pm
mptfan wrote:
Mon Nov 26, 2018 4:46 pm
UpperNwGuy wrote:
Mon Nov 26, 2018 4:44 pm
When Fidelity made its announcement on August 1, I applauded them for putting some competition into the industry. They have certainly succeeded.
Some competition was put into the industry in 1974 when John Bogle founded Vanguard.
Yes, but that was long, long ago....
And Fidelity index funds started becoming cost competitive with Vanguard twenty years ago and on average had the edge for the last ten years. The biggest advantage that Vanguard has had recently was their breadth of index fund offerings. However, for the average investor there are more than enough asset classes at Fidelity to construct a good portfolio.

For the ultimate slice and dicer, Fidelity does lack a small value index fund and a variety bond index funds. The latter is much less important, because bond funds have shown a much better track record of neutral -> small Alpha performance.

The industry owes John Bogle a debt of gratitude, but in my opinion Vanguard has been increasingly resting on his laurels.

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by Paul K » Mon Nov 26, 2018 9:59 pm

greg24 wrote:
Mon Nov 26, 2018 3:59 pm
HEDGEFUNDIE wrote:
Mon Nov 26, 2018 3:55 pm
greg24 wrote:
Mon Nov 26, 2018 3:43 pm
MFInvestor wrote:
Mon Nov 26, 2018 10:58 am
Vanguard's lowering of minimum investment amount on 38 index funds Admiral shares to $3,000 is seen as a response to Fidelity move.
Fidelity's zero campaign has drawn enormous coverage from financial news outlets.

I heard about Vanguard's response when people on this message board accidentally noticed it. There seems to have been very little coverage by the financial press.
Vanguard doesn’t advertise.

Fidelity is splashing commercials for its Zero funds all over nationally televised football games.
I realize the two have completely different advertising philosophies.

But it still shows how good Fidelity is at PR, and how poor Vanguard is.
Vanguard went from nothing to 5 trillions in assets under management with virtually no advertising budget. If that's not good PR, what is?

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by zaboomafoozarg » Mon Nov 26, 2018 10:39 pm

mptfan wrote:
Mon Nov 26, 2018 4:46 pm
UpperNwGuy wrote:
Mon Nov 26, 2018 4:48 pm
Some competition was put into the industry in 1974 when John Bogle founded Vanguard.
Yes, but that was long, long ago....
And Vanguard's probably still using the same computers to process transactions that they did back then!

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by whodidntante » Mon Nov 26, 2018 10:42 pm

zaboomafoozarg wrote:
Mon Nov 26, 2018 10:39 pm


And Vanguard's probably still using the same computers to process transactions that they did back then!
Someone had to buy the Commodore 128!

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by bhsince87 » Mon Nov 26, 2018 10:48 pm

Competition is good. It makes capitalism successful.

Fidelity and Vanguard are the two big dogs. It would be nice if we had a decent third player nipping at their heels.

Janus looked like they might fill that rule many years ago, but they flamed out.

Who's next?
"If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom, go home from us in peace." Samuel Adams

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by saintsfan342000 » Mon Nov 26, 2018 10:53 pm

gtwhitegold wrote:
Mon Nov 26, 2018 9:51 pm
This is why I was disappointed that there weren't more of the iShares Edge Multifactor Funds added. ISCF and EMGF would definitely be appreciated by me and some other tilters I'm sure.
Don't they trade commission-free at Vanguard?

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by Taylor Larimore » Mon Nov 26, 2018 11:03 pm

Bogleheads:

I am happy to learn that Fidelity has eliminated the expense ratio on its U.S. and International total market index funds. It reflects the growing recognition of the many benefits, including the ability of mutual fund companies to lower the cost of total market index funds.

Thank you Mr. Bogle!

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by JoMoney » Mon Nov 26, 2018 11:39 pm

I second, or third or... whatever ... the sentiment that competition is good, and thanks to Mr. Bogle. My only concern is how sustainable this will be for Fidelity, and what corners might be cut to maintain it.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

2015
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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by 2015 » Mon Nov 26, 2018 11:56 pm

Hold on a second, hold up partner, and slow your roll, Joe. Nice headline, great click bait as usual, but isn't there more to the story?

IIRC, wasn't there a typically incredibly long thread here after Fidelity introduced these funds earlier this year whereby some kind of conclusion was reached that VG like funds were superior in that they had better index tracking error histories? They were also superior for another reason but I lost interest by the 80 millionth post in the thread.

Also IIRC, White Coat Investor posted something on his site regarding VG's funds being superior to similar Fidelity no cost funds for the same reason. In typical fashion, WCI's explanation was vastly more succinct and effective in presenting the information than what was found in the thread. At least I found it to be so.

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by HEDGEFUNDIE » Tue Nov 27, 2018 12:01 am

2015 wrote:
Mon Nov 26, 2018 11:56 pm
Hold on a second, hold up partner, and slow your roll, Joe. Nice headline, great click bait as usual, but isn't there more to the story?

IIRC, wasn't there a typically incredibly long thread here after Fidelity introduced these funds earlier this year whereby some kind of conclusion was reached that VG like funds were superior in that they had better index tracking error histories? They were also superior for another reason but I lost interest by the 80 millionth post in the thread.

Also IIRC, White Coat Investor posted something on his site regarding VG's funds being superior to similar Fidelity no cost funds for the same reason. In typical fashion, WCI's explanation was vastly more succinct and effective in presenting the information than what was found in the thread. At least I found it to be so.
The Zero funds track completely new indicies. We need more time before we can say whether they are better or worse than VTSAX, etc.

2015
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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by 2015 » Tue Nov 27, 2018 12:14 am

HEDGEFUNDIE wrote:
Tue Nov 27, 2018 12:01 am
2015 wrote:
Mon Nov 26, 2018 11:56 pm
Hold on a second, hold up partner, and slow your roll, Joe. Nice headline, great click bait as usual, but isn't there more to the story?

IIRC, wasn't there a typically incredibly long thread here after Fidelity introduced these funds earlier this year whereby some kind of conclusion was reached that VG like funds were superior in that they had better index tracking error histories? They were also superior for another reason but I lost interest by the 80 millionth post in the thread.

Also IIRC, White Coat Investor posted something on his site regarding VG's funds being superior to similar Fidelity no cost funds for the same reason. In typical fashion, WCI's explanation was vastly more succinct and effective in presenting the information than what was found in the thread. At least I found it to be so.
The Zero funds track completely new indicies. We need more time before we can say whether they are better or worse than VTSAX, etc.
Did you read that thread? I don't recall that being the consensus. There was a lot of dancing on the indices topic (including a couple of charts if memory serves me). At any rate, I came away from the discussion not wanting to be one of the early adopter roadkill specimens.

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by mptfan » Tue Nov 27, 2018 12:25 am

bhsince87 wrote:
Mon Nov 26, 2018 10:48 pm
Who's next?
Schwab.

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by HEDGEFUNDIE » Tue Nov 27, 2018 12:42 am

2015 wrote:
Tue Nov 27, 2018 12:14 am
HEDGEFUNDIE wrote:
Tue Nov 27, 2018 12:01 am
2015 wrote:
Mon Nov 26, 2018 11:56 pm
Hold on a second, hold up partner, and slow your roll, Joe. Nice headline, great click bait as usual, but isn't there more to the story?

IIRC, wasn't there a typically incredibly long thread here after Fidelity introduced these funds earlier this year whereby some kind of conclusion was reached that VG like funds were superior in that they had better index tracking error histories? They were also superior for another reason but I lost interest by the 80 millionth post in the thread.

Also IIRC, White Coat Investor posted something on his site regarding VG's funds being superior to similar Fidelity no cost funds for the same reason. In typical fashion, WCI's explanation was vastly more succinct and effective in presenting the information than what was found in the thread. At least I found it to be so.
The Zero funds track completely new indicies. We need more time before we can say whether they are better or worse than VTSAX, etc.
Did you read that thread? I don't recall that being the consensus. There was a lot of dancing on the indices topic (including a couple of charts if memory serves me). At any rate, I came away from the discussion not wanting to be one of the early adopter roadkill specimens.
Yes I did read the thread, and there were a few folks who criticized Fidelity's past attempts at indexing. Hardly what I would call a consensus relevant for the new Zero funds.

How could there be a consensus for completely new funds that track completely new indicies?

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by tj » Tue Nov 27, 2018 12:47 am

bhsince87 wrote:
Mon Nov 26, 2018 10:48 pm
Competition is good. It makes capitalism successful.

Fidelity and Vanguard are the two big dogs. It would be nice if we had a decent third player nipping at their heels.

Janus looked like they might fill that rule many years ago, but they flamed out.

Who's next?

Hasn't Schwab been the other big dog for quite some time?

2015
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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by 2015 » Tue Nov 27, 2018 12:51 am

HEDGEFUNDIE wrote:
Tue Nov 27, 2018 12:42 am
2015 wrote:
Tue Nov 27, 2018 12:14 am
HEDGEFUNDIE wrote:
Tue Nov 27, 2018 12:01 am
2015 wrote:
Mon Nov 26, 2018 11:56 pm
Hold on a second, hold up partner, and slow your roll, Joe. Nice headline, great click bait as usual, but isn't there more to the story?

IIRC, wasn't there a typically incredibly long thread here after Fidelity introduced these funds earlier this year whereby some kind of conclusion was reached that VG like funds were superior in that they had better index tracking error histories? They were also superior for another reason but I lost interest by the 80 millionth post in the thread.

Also IIRC, White Coat Investor posted something on his site regarding VG's funds being superior to similar Fidelity no cost funds for the same reason. In typical fashion, WCI's explanation was vastly more succinct and effective in presenting the information than what was found in the thread. At least I found it to be so.
The Zero funds track completely new indicies. We need more time before we can say whether they are better or worse than VTSAX, etc.
Did you read that thread? I don't recall that being the consensus. There was a lot of dancing on the indices topic (including a couple of charts if memory serves me). At any rate, I came away from the discussion not wanting to be one of the early adopter roadkill specimens.
Yes I did read the thread, and there were a few folks who criticized Fidelity's past attempts at indexing. Hardly what I would call a consensus relevant for the new Zero funds.

How could there be a consensus for completely new funds that track completely new indicies?
I agree with you. OTOH, I'm simply though vaguely recalling that thread and there were more than a "few folks" who discussed Fidelity's indexing. In Bogleheads monstrously long threads like that one, there's no such as a few people discussing anything.

As I said I agree with you in principle; however, I don't like being early adopter roadkill so until the street sweeper comes I'll take another road for the time being.

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by nedsaid » Tue Nov 27, 2018 12:55 am

I would say that the USS Fidelity has fired a shot across the bow of the HMS Vanguard. How will Lord Nelson respond?
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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by nedsaid » Tue Nov 27, 2018 1:06 am

HEDGEFUNDIE wrote:
Mon Nov 26, 2018 3:55 pm


Vanguard doesn’t advertise.
Actually, they do or at least they used to. I can remember hearing Vanguard Radio ads and seeing adverts in Money Magazine.
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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by triceratop » Tue Nov 27, 2018 1:18 am

Nate79 wrote:
Mon Nov 26, 2018 3:50 pm
Reality - Fidelity reduces fees on ton of index funds and launches zero fee fund offerings. This puts their index funds at the lowest cost in the industry and low minimums. They also added access to more iShare funds as no trading cost. They also launched an HSA account which will be a great, low cost option this industry has been waiting for.

Bogleheads response - This is just a way for Fidelity to get you into high cost active funds and advisory services. These slippery salesman will go to no ends to get your money. Stay away! Since they are not a mutual company they are out to get you.


Reality - Vanguard closes their Investor shares and lowers the minimum on Admiral funds thereby lowering the cost to investors. They also allowed access to these funds in individual 401k's.

Bogleheads response - Yippee! Woohoo! Let's throw a party. I can't believe they are reducing costs for the average investor. This just goes to show that they have your interest at heart. As a mutual company it is not surprising!

Yup, nothing changes around here. Fidelity and Schwab has lower cost offerings for a while now. But you wouldn't know that from the responses.
As a consumer I prefer, all other things being nearly equal, for my desires as a consumer to be strictly aligned with the (short- and long-term) goals of those serving me. I find individualized analysis of simple actions like this to be a bit simplistic and naiive compared to the more strategic thinking that corporations use. I find the profit and sales structure of any firm like Fidelity problematic for my purposes. Others' mileage may vary. That is not to say that Vanguard was not clearly behind the ball on these things. I think things are quite a bit more nuanced than the extremes of "Vanguard fanboy" or "cheapest nominal price is unquestionably good and maybe even what we should use"; you don't have to fall into either camp.

If you want an analogy, there is why I buy Apple phones over Android-based devices: Apple extends itself as a hardware and integrated software company. That's it. It also has historically famously protected customer (information) security, recognizing their reputation as being staked at least partially in this area. On the other hand, Google extends itself as possessing a similar role, in this space, but not so secretly on the side is also a massive (personal-information) data broker and advertising giant, an industry I don't wish to participate in. You see the impact day-to-day in the impact on personal and social privacy.

Disclaimer: I use non-Vanguard products in my investments. I'm not a Vanguard fanboy.
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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by darkhorse346 » Tue Nov 27, 2018 6:04 am

nedsaid wrote:
Tue Nov 27, 2018 1:06 am
HEDGEFUNDIE wrote:
Mon Nov 26, 2018 3:55 pm


Vanguard doesn’t advertise.
Actually, they do or at least they used to. I can remember hearing Vanguard Radio ads and seeing adverts in Money Magazine.
I have seen numerous Vanguard commercials on TV over the last 2-3 months. I had never seen these commercials until after Fidelity did there headline changes back in August.

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by sambb » Tue Nov 27, 2018 6:23 am

Nate79 wrote:
Mon Nov 26, 2018 3:50 pm
Reality - Fidelity reduces fees on ton of index funds and launches zero fee fund offerings. This puts their index funds at the lowest cost in the industry and low minimums. They also added access to more iShare funds as no trading cost. They also launched an HSA account which will be a great, low cost option this industry has been waiting for.

Bogleheads response - This is just a way for Fidelity to get you into high cost active funds and advisory services. These slippery salesman will go to no ends to get your money. Stay away! Since they are not a mutual company they are out to get you.


Reality - Vanguard closes their Investor shares and lowers the minimum on Admiral funds thereby lowering the cost to investors. They also allowed access to these funds in individual 401k's.

Bogleheads response - Yippee! Woohoo! Let's throw a party. I can't believe they are reducing costs for the average investor. This just goes to show that they have your interest at heart. As a mutual company it is not surprising!

Yup, nothing changes around here. Fidelity and Schwab has lower cost offerings for a while now. But you wouldn't know that from the responses.
Spot on analysis.

With vanguard unfortunately, one also gets very poor IT and customer service, which is not being addressed by senior leadership, and which seems to reflect some intrisnic flaw. I am a heavy vanguard user, but they certainly have issues that are not present in fidelity

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by peppers » Tue Nov 27, 2018 6:40 am

fwiw

Last time I checked, BlackRock was still the largest AUM leader.

Let's see....https://www.thebalance.com/which-firms- ... nt-4173923

Yep
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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by Jack FFR1846 » Tue Nov 27, 2018 7:10 am

My experiment, splitting my position in half at Fidelity to watch FZROX vs the now lower ER FSKAX. Don't forget that ERs were slashed in half on a number of non-zero funds. Split date August 9. I don't care how close a fund sticks with an index or if they make up their own index. I know it's very short term still, but there's no boogie man stealing my moneys from my zero fund.

As of last night:

FSKAX: $304,691
FZROX: $304,954
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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by ZumZabo » Tue Nov 27, 2018 9:05 am

(First sentence edited to more accurately express my question)

Perhaps someone can help me understand because I don’t. What is in it for Fidelity to take in billions of assets under management that they will earn zero fees on?
Is it sustainable long term? What happens years from now if they reverse that policy and start charging management fees? Do the investors who would jump ship because zero fees is the only reason they are there stay because of capital gains? I understand loss leaders but those are to get one to buy something else that has fat profit margins. Will someone who came aboard for zero fees buy something else with fees?
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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by dogagility » Tue Nov 27, 2018 6:31 pm

ZumZabo wrote:
Tue Nov 27, 2018 9:05 am
Perhaps someone can help me understand because I don’t. What is in it for Fidelity to take in billions of assets under management that they will earn zero fees on?
It's a loss-leader. They expect some people will pay for other services.
ZumZabo wrote:
Tue Nov 27, 2018 9:05 am
Is it sustainable long term?
Define long term? For the foreseeable future... yes.
ZumZabo wrote:
Tue Nov 27, 2018 9:05 am
What happens years from now if they reverse that policy and start charging management fees?
Unlikely Fidelity will pull the switcharoo. Would alienate many of the current customers who (with non-taxable money) would just move their money elsewhere.
ZumZabo wrote:
Tue Nov 27, 2018 9:05 am
I understand loss leaders but those are to get one to buy something else that has fat profit margins. Will someone who came aboard for zero fees buy something else with fees?
That's a good question. Possibly.
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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by columbia » Tue Nov 27, 2018 6:59 pm

They might - for example - decide to move their HSA to Fidelity.
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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by arf30 » Tue Nov 27, 2018 7:07 pm

If the zero funds somehow become unprofitable in the future they'll just close the fund to new investments, revise the prospectus to include a cash position, take the securities lending income, or any number of other tricks.

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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by AlphaLess » Tue Nov 27, 2018 7:12 pm

b0B wrote:
Mon Nov 26, 2018 11:48 am
Fidelity made a major negative change that actually means that despite these loss leaders, they have become less generous.

They have (mostly) got rid of their Brokerage Transfer Bonuses, which is a much bigger decrease than some tiny difference in ER. You'd be better off picking up a bonus elsewhere than getting no bonus and slightly lower ER (which wouldn't guarantee better return anyway). It's the same principle that if you are going to the trouble of opening a new bank you are typically better off getting a signup bonus, than slightly higher interest.
Seems like the right move.

The brokerage funding bonus is basically deadweight loss to the company, assuming everyone plays rinse-and-repeat.
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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by abuss368 » Tue Nov 27, 2018 8:05 pm

Investors as a group overall will benefit.

Thank you Mr. Bogle for leading the crusade to give ordinary investors their fair share!
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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by rob » Tue Nov 27, 2018 8:12 pm

HEDGEFUNDIE wrote:
Mon Nov 26, 2018 3:55 pm
Vanguard doesn’t advertise.

Fidelity is splashing commercials for its Zero funds all over nationally televised football games.
I see Vanguard TV ads all the time.... I see them in about the same frequency as Fido ads (US north east)
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Re: Fidelity’s zero-fee campaign spurs $6.6bn of inflows Boston manager outsells Vanguard by more than 40% in October a

Post by boglesmind » Wed Nov 28, 2018 12:45 am

triceratop wrote:
Tue Nov 27, 2018 1:18 am
Nate79 wrote:
Mon Nov 26, 2018 3:50 pm
Reality - Fidelity reduces fees on ton of index funds and launches zero fee fund offerings. This puts their index funds at the lowest cost in the industry and low minimums. They also added access to more iShare funds as no trading cost. They also launched an HSA account which will be a great, low cost option this industry has been waiting for.

Bogleheads response - This is just a way for Fidelity to get you into high cost active funds and advisory services. These slippery salesman will go to no ends to get your money. Stay away! Since they are not a mutual company they are out to get you.


Reality - Vanguard closes their Investor shares and lowers the minimum on Admiral funds thereby lowering the cost to investors. They also allowed access to these funds in individual 401k's.

Bogleheads response - Yippee! Woohoo! Let's throw a party. I can't believe they are reducing costs for the average investor. This just goes to show that they have your interest at heart. As a mutual company it is not surprising!

Yup, nothing changes around here. Fidelity and Schwab has lower cost offerings for a while now. But you wouldn't know that from the responses.
As a consumer I prefer, all other things being nearly equal, for my desires as a consumer to be strictly aligned with the (short- and long-term) goals of those serving me. I find individualized analysis of simple actions like this to be a bit simplistic and naiive compared to the more strategic thinking that corporations use. I find the profit and sales structure of any firm like Fidelity problematic for my purposes. Others' mileage may vary. That is not to say that Vanguard was clearly behind the ball on these things. I think things are quite a bit more nuanced than the extremes of "Vanguard fanboy" or "cheapest nominal price is unquestionably good and maybe even what we should use"; you don't have to fall into either camp.

If you want an analogy, there is why I buy Apple phones over Android-based devices: Apple extends itself as a hardware and integrated software company. That's it. It also has historically famously protected customer (information) security, recognizing their reputation as being staked at least partially in this area. On the other hand, Google extends itself as possessing a similar role, in this space, but not so secretly on the side is also a massive (personal-information) data broker and advertising giant, an industry I don't wish to participate in. You see the impact day-to-day in the impact on personal and social privacy.

Disclaimer: I use non-Vanguard products in my investments. I'm not a Vanguard fanboy.
+infinity :thumbsup :thumbsup a thoughtful analysis.
Compare this to simplistic responses and unreasonable generalizations :oops:
In the last 25+ years I've seen Fidelity and others pushing front-load funds heavily to 401-K plans and to individual investors. Experienced it personally. Vanguard's low cost structure and investors flocking to Vanguard year after year resulting in a $4 or 5 trillion in total that pushed or dragged Fidelity and other fund companies kicking and screaming to lower their costs. Thanks Bogle and Bogleheads forum! How quickly folks forget the law suits by Fidelity and other fund companies' own employees about their 401K offerings - PT Barnum's sayings come to mind!

I am no fanboy either of Vanguard or Fidelity. Have funds in both, experienced good and bad service in both. One company is clearly aligned with my interests and the other with the interests of Johnson family.

Boglesmind

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