Fidelity HSA - new exclusive "Health Savings" funds

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sycamore
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Fidelity HSA - new exclusive "Health Savings" funds

Post by sycamore »

Fidelity is advertising two funds for an HSA account, see https://www.fidelity.com/go/hsa/investing-your-hsa
Are there investing options designed specifically to help save for health care?
Yes, Fidelity is pleased to introduce two new mutual funds created for investors who want to save for future medical expenses.

Because the time horizon of health care expenses is uncertain, the funds
- Follow an asset allocation strategy designed to balance growth and risk through different market environments
- Help take the guesswork out of managing an investment portfolio to save for health care expenses.
Looks like Fidelity is doing what they've done with their target date funds - one fund is actively invested and another is invested in passive funds.

The actively managed Fidelity Health Savings Fund FHLSX with 0.47% expense ratio. Approx 27% equities, 71% bonds, 2% short-term.

The other is Fidelity Health Savings Index Fund with 0.17% ER. Approx 38% equities and 62 bonds.

Both invest about 30-35% of equities in international stocks. Both have an inception date of 3/2/2020.

I can see the funds being targeted to people who aren't sure how to invest their HSA money. Of course one could get a similar balanced fund at lower ER via a Fidelity Freedom Index Funds.

Anyone interested in using either new fund? Personally I'm sticking with a Freedom Index Fund at my desired AA (FFEDX/2025)
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by Vanguard Fan 1367 »

I love having Fidelity's S&P 500 fund for my HSA. Sure beats the old place where I got well under 1% interest or had an option to invest but not at Fidelity's .015% expense ratio.
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FIREchief
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by FIREchief »

Zero interest. My HSA funds are invested in individual TIPS and US TMI, same as the rest of my portfolio.
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anon_investor
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by anon_investor »

Sounds pretty expensive to me since you can do a 3 fund portfolio using existing Fidelity index finds for a lot lower ER. I guess Fidelity has to make some money on their "free" HSAs.
Chris K Jones
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by Chris K Jones »

No interest here. My HSA is part of my fixed income allocation and is in the US Bond Index. I am very happy with it.
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by Cash »

Sticking with the Zero funds.
dignan
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by dignan »

You beat me to it. I was going to post this as well since I received an email about it. I agree that it's probably for people who aren't sure how to invest. I was excited to know that they offer Institutional Premium Class funds for HSA accounts. So I'm currently invested in a Fidelity Freedom Index Fund - Institutional Premium Class. I'll gladly pay 8 basis points for auto rebalancing with a glide path.
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by Spirit Rider »

Bogleheads need to keep in mind, they are the true 1%. I'm not talking about income or networth. The vast majority of HSAs are almost certainly held solely in savings accounts/MMF. There is significant value in a fund that gets them investing their HSA accounts.

This is not any different than the majority of experienced Bogleheads would not uses a target date fund. Yet it is probably a good fund for people just starting out.
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by lazynovice »

We are Bogleheads who keep our Fidelity HSA in a money market with no regrets.
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zincTwo
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by zincTwo »

As a CA HSA [state-taxable] user, I am sensitive to things that contribute to taxable distributions,dividends, and turnover rates. I was in a target index fund in my HSA, but the realized gains from turnover and distributions hurt on CA state taxes... so I just moved my long-term HSA money (whatever exceeds my needed deductible) into ITOT (TSM ETF), which has low turnover and low ER.
My HSA is a low % of my overall portfolio, so I am not concerned with having a bond allocation in there.
aristotelian
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by aristotelian »

I love Fidelity's HSA but have absolutely zero interest in new exclusive "health savings funds". Investing it so conservatively makes little sense to me. The tax free growth is a huge benefit. Why give that up?
petulant
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by petulant »

I also saw this recently. It doesn't make sense for an educated investor. The fund is allowed to veer between 20% and 40% equity. Any educated investor can pick a target allocation and rebalancing strategy rather than rely on the HSA fund. I'm not even sure it's good for beginning investors since the fund distracts them from deciding how much of their HSA is for near-term medical emergencies and how much is for long-term saving.

This is clearly a marketing gimmick to improve Fidelity's management margins from the HSA accounts.
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by TropikThunder »

lazynovice wrote: Sat Jun 13, 2020 2:12 pm We are Bogleheads who keep our Fidelity HSA in a money market with no regrets.
Do you spend it all? Or you mean you just let the unspent funds sit in essentially a 0% interest settlement fund.
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anon_investor
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by anon_investor »

lazynovice wrote: Sat Jun 13, 2020 2:12 pm We are Bogleheads who keep our Fidelity HSA in a money market with no regrets.
That seems like a waste. Why not at least buy individual US treasuries or something?
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by willthrill81 »

Not at all interested. This sounds like a product for those who primarily take a hands-off approach to investing.
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jeffyscott
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by jeffyscott »

I actually ran across this during it's first month of existence, when I was looking for some sort of set and forget asset allocation fund to put my spouse's small HSA in. We had started her with TIPS index fund, but decided to shift due to the yield falling to -0.5% real or so.

Target was 30-50% equities, to be in line with our overall asset allocation and since we want to avoid owning a lot of low yielding treasuries or TIPS, opted for the actively managed HSA fund for now.
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by livesoft »

sycamore wrote: Sat Jun 13, 2020 9:53 amAnyone interested in using either new fund? Personally I'm sticking with a Freedom Index Fund at my desired AA (FFEDX/2025)
I would not have thought that one could use the institutional FFEDX and one would have to use the FQIJX. Are Fidelity HSAs special in that regard?
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informal guide
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by informal guide »

I want a more aggressive asset allocation too. My spouse and I use our Fidelity HSA accounts as investment accounts. Mine (low 6 figures) is in four low expense index ETFs at my overall asset allocation (65% equities); my spouse (low 5 figures) is in Fidelity Four in one index (FFNOX) at 11 bps expense ratio; today that fund is about 85% equities
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by terran »

livesoft wrote: Sun Jun 14, 2020 8:08 am
sycamore wrote: Sat Jun 13, 2020 9:53 amAnyone interested in using either new fund? Personally I'm sticking with a Freedom Index Fund at my desired AA (FFEDX/2025)
I would not have thought that one could use the institutional FFEDX and one would have to use the FQIJX. Are Fidelity HSAs special in that regard?
Yes, for some reason they are. I read about it on some thread here and went ahead and switched over the institutional class of the target date fund I was already using. My guess is it's because HSAs started as only being employer plans at Fidelity. Maybe it was easier to just leave things as is when they added consumer accounts.
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ram
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by ram »

My HSA is a default Roth Account and is invested in SP 500 fund.
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whodidntante
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by whodidntante »

This page indicates that HSAs can invest in the "Institutional Premium" share class of the freedom index funds, at a lower 0.08% ER. If you want a target date fund, you might as well save a few bps. Has anyone tried it?

https://www.fidelity.com/bin-public/060 ... nsider.pdf
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by lazynovice »

TropikThunder wrote: Sat Jun 13, 2020 10:16 pm
lazynovice wrote: Sat Jun 13, 2020 2:12 pm We are Bogleheads who keep our Fidelity HSA in a money market with no regrets.
Do you spend it all? Or you mean you just let the unspent funds sit in essentially a 0% interest settlement fund.
Yes, we are spending it on healthcare. We can no longer add to it.
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dogagility
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by dogagility »

No interest whatsoever.

For the Boglehead DIYer, why pay the 0.17% expense ratio when I can have near zero expense cost by investing in FXNAX and FZROX?
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by dogagility »

lazynovice wrote: Sun Jun 14, 2020 10:55 am
TropikThunder wrote: Sat Jun 13, 2020 10:16 pm
lazynovice wrote: Sat Jun 13, 2020 2:12 pm We are Bogleheads who keep our Fidelity HSA in a money market with no regrets.
Do you spend it all? Or you mean you just let the unspent funds sit in essentially a 0% interest settlement fund.
Yes, we are spending it on healthcare. We can no longer add to it.
I will speculate that 1) you are older or 2) don't have funds to cash-flow your healthcare expenses. Otherwise, I am not seeing the value in spending from your HSA.
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sycamore
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by sycamore »

whodidntante wrote: Sun Jun 14, 2020 9:58 am This page indicates that HSAs can invest in the "Institutional Premium" share class of the freedom index funds, at a lower 0.08% ER. If you want a target date fund, you might as well save a few bps. Has anyone tried it?

https://www.fidelity.com/bin-public/060 ... nsider.pdf
Yep, I'm using one of them. Same as the regular share class but lower ER, yay!
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by lazynovice »

dogagility wrote: Sun Jun 14, 2020 11:05 am
lazynovice wrote: Sun Jun 14, 2020 10:55 am
TropikThunder wrote: Sat Jun 13, 2020 10:16 pm
lazynovice wrote: Sat Jun 13, 2020 2:12 pm We are Bogleheads who keep our Fidelity HSA in a money market with no regrets.
Do you spend it all? Or you mean you just let the unspent funds sit in essentially a 0% interest settlement fund.
Yes, we are spending it on healthcare. We can no longer add to it.
I will speculate that 1) you are older or 2) don't have funds to cash-flow your healthcare expenses. Otherwise, I am not seeing the value in spending from your HSA.
Older is in the eye of the beholder. The value to me was the tax savings of more then 39% when the funds were put into the account and the simplicity of the money being there when there is a health issue in my family.
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by BrandonBogle »

Cash wrote: Sat Jun 13, 2020 12:34 pm Sticking with the Zero funds.
Same here. I was using Fidelity’s Zero Total US fund, but switched to their Zero Extended Market fund. I have some Extended Market helping with some S&P 500 stocks in taxable that have too much gain for me to sell. Together, I treat these as essentially Total US Stock.

I used to have Vanguard’s Extended Market Institutional Plus fund in an old 401k from a previous employer. I moved my allocation to Fidelity’s because that old 401k has access to Vanguard’s Stable Fund that I am now invested in over there.
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JDCarpenter
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by JDCarpenter »

We also treat HSAs as Roths, so the new investment options are not attractive. Although they are at Fidelity, investments are 100% VBR.
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by Spirit Rider »

lazynovice wrote: Sun Jun 14, 2020 1:20 pm
dogagility wrote: Sun Jun 14, 2020 11:05 am
lazynovice wrote: Sun Jun 14, 2020 10:55 am
TropikThunder wrote: Sat Jun 13, 2020 10:16 pm
lazynovice wrote: Sat Jun 13, 2020 2:12 pm We are Bogleheads who keep our Fidelity HSA in a money market with no regrets.
Do you spend it all? Or you mean you just let the unspent funds sit in essentially a 0% interest settlement fund.
Yes, we are spending it on healthcare. We can no longer add to it.
I will speculate that 1) you are older or 2) don't have funds to cash-flow your healthcare expenses. Otherwise, I am not seeing the value in spending from your HSA.
Older is in the eye of the beholder. The value to me was the tax savings of more then 39% when the funds were put into the account and the simplicity of the money being there when there is a health issue in my family.
I believe @dogagility's speculation was, whether you can contribute to an HSA account should not really be relevant to how you invest it. Only your withdrawal requirements should affect that.
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by Big Dog »

dogagility wrote: Sun Jun 14, 2020 11:05 am
lazynovice wrote: Sun Jun 14, 2020 10:55 am
TropikThunder wrote: Sat Jun 13, 2020 10:16 pm
lazynovice wrote: Sat Jun 13, 2020 2:12 pm We are Bogleheads who keep our Fidelity HSA in a money market with no regrets.
Do you spend it all? Or you mean you just let the unspent funds sit in essentially a 0% interest settlement fund.
Yes, we are spending it on healthcare. We can no longer add to it.
I will speculate that 1) you are older or 2) don't have funds to cash-flow your healthcare expenses. Otherwise, I am not seeing the value in spending from your HSA.
I'm older (mid-60s), do have the funds to cash flow current expenses, but am spending down HSA anyway as a simplicity measure. It is such a small portion of of the total Assets, it's not worth keeping for xx years, IMO. (Our company only went to a HD plan a couple of years ago, so the amount of equity build up is minimal. Plus, as a CA resident, the paperwork is just not worth the hassle.)

But to answer teh OP, no, not interested. We have Fido's Zero Treasury fund in the HSA. (again, CA resident)
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by 1789 »

Everything on top of annual deductible is invested in FSKAX. No complaints here
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Re: Fidelity HSA - new exclusive "Health Savings" funds

Post by terran »

sycamore wrote: Sun Jun 14, 2020 12:10 pm
whodidntante wrote: Sun Jun 14, 2020 9:58 am This page indicates that HSAs can invest in the "Institutional Premium" share class of the freedom index funds, at a lower 0.08% ER. If you want a target date fund, you might as well save a few bps. Has anyone tried it?

https://www.fidelity.com/bin-public/060 ... nsider.pdf
Yep, I'm using one of them. Same as the regular share class but lower ER, yay!
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