Fidelity vs. Vanguard

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
User avatar
Kevin M
Posts: 11280
Joined: Mon Jun 29, 2009 3:24 pm
Contact:

Re: Fidelity vs. Vanguard

Post by Kevin M » Sat May 24, 2014 8:01 pm

truenorth418 wrote:I like VG and own several of their funds outside of my VG account but It is a bit of a nuisance that they keep their mutual fund and brokerage accounts segregated.
They are in the process of changing this ... sloooooowly. It has been rolled out to some customers, but the rest of us are waiting.

Kevin
Wiki ||.......|| Suggested format for Asking Portfolio Questions (edit original post)

placeholder
Posts: 4023
Joined: Tue Aug 06, 2013 12:43 pm

Re: Fidelity vs. Vanguard

Post by placeholder » Sun May 25, 2014 10:50 am

ogd wrote:placeholder: see several posters above, and I've seen it at Schwab as well.
Most of these have points in the application process where you describe your investing style so I suspect that filling it out the way I do prevents personal contact other than the usual mass emails that I ignore so unless you count that as pressure I repeat that I haven't seen it at Fidelity or Schwab or any other brokerage that I have used.

Austintatious
Posts: 878
Joined: Thu Sep 13, 2012 7:01 pm

Re: Fidelity vs. Vanguard

Post by Austintatious » Sun May 25, 2014 11:41 am

To me, the choice of investment houses has been an easy one, the reasons explained quite well on this page.

https://about.vanguard.com/what-sets-vanguard-apart/

I've heard it said that the only reason the other investment firms offer low cost, broadly diversified index funds is because of Vanguard's leadership in the field. True or not, Vanguard's unique concept of ownership, the company's intense focus on minimizing costs for their clients, and just knowing the Vanguard story have made choosing "the house that Jack built" a "no brainer" for me.

555
Posts: 4955
Joined: Thu Dec 24, 2009 7:21 am

Re: Fidelity vs. Vanguard

Post by 555 » Sun May 25, 2014 5:20 pm

The Spartan lineup is very limited compared to Vanguard's array of low cost index funds. Fidelity doesn't even have a Total International Stock Index type fund.

stlutz
Posts: 5516
Joined: Fri Jan 02, 2009 1:08 am

Re: Fidelity vs. Vanguard

Post by stlutz » Sun May 25, 2014 6:01 pm

Who one chooses as their custodian vs. their asset manager are different questions. VG ETFs can be purchased from any brokerage. In general, Vanguard is the best asset manager out there. If one only owns ETFs from Vanguard, they have done well. That doesn't mean they need to hold said ETFs at Vanguard.

User avatar
Wildebeest
Posts: 1204
Joined: Fri Dec 27, 2013 2:36 pm

Re: Fidelity vs. Vanguard

Post by Wildebeest » Sun May 25, 2014 6:20 pm

Austintatious wrote:To me, the choice of investment houses has been an easy one, the reasons explained quite well on this page.

https://about.vanguard.com/what-sets-vanguard-apart/

I've heard it said that the only reason the other investment firms offer low cost, broadly diversified index funds is because of Vanguard's leadership in the field. True or not, Vanguard's unique concept of ownership, the company's intense focus on minimizing costs for their clients, and just knowing the Vanguard story have made choosing "the house that Jack built" a "no brainer" for me.
I am a believer that if John C Bogle had not started Vanguard we would be paying ER's of 1 % or higher and while index funds would exist, the cost would be much higher.

Unless it will cost me a bundle, I will not invest with Fidelity.
The Golden Rule: One should treat others as one would like others to treat oneself.

User avatar
Kevin M
Posts: 11280
Joined: Mon Jun 29, 2009 3:24 pm
Contact:

Re: Fidelity vs. Vanguard

Post by Kevin M » Sun May 25, 2014 6:39 pm

555 wrote:The Spartan lineup is very limited compared to Vanguard's array of low cost index funds. Fidelity doesn't even have a Total International Stock Index type fund.
Although I agree that Vanguard has a much broader selection of low-cost index funds, Fidelity does offer the Spartan Global Ex-US fund, which is a total international index fund (unlike the fund they call Total International, which does not include emerging markets).

Kevin
Wiki ||.......|| Suggested format for Asking Portfolio Questions (edit original post)

Jagman
Posts: 118
Joined: Sat Jul 19, 2008 4:38 pm

Re: Fidelity vs. Vanguard

Post by Jagman » Sun May 25, 2014 6:41 pm

555 wrote:The Spartan lineup is very limited compared to Vanguard's array of low cost index funds. Fidelity doesn't even have a Total International Stock Index type fund.
Spartan® Global ex U.S. Index Fund - Fidelity Advantage Class
Symbol: FSGDX

https://fundresearch.fidelity.com/mutua ... /316146141

ER .18%

555
Posts: 4955
Joined: Thu Dec 24, 2009 7:21 am

Re: Fidelity vs. Vanguard

Post by 555 » Sun May 25, 2014 6:49 pm

Kevin M wrote:
555 wrote:The Spartan lineup is very limited compared to Vanguard's array of low cost index funds. Fidelity doesn't even have a Total International Stock Index type fund.
Although I agree that Vanguard has a much broader selection of low-cost index funds, Fidelity does offer the Spartan Global Ex-US fund, which is a total international index fund (unlike the fund they call Total International, which does not include emerging markets).

Kevin
You are right about the countries covered by these two funds. But they are large cap funds, while Vanguard's Total International Stock Index fund is all caps. Fidelity's "Global" fund misses about 12% of the market.

Compare the styleboxes.
http://portfolios.morningstar.com/fund/ ... ture=en-US
http://portfolios.morningstar.com/fund/ ... ture=en-US

User avatar
Kevin M
Posts: 11280
Joined: Mon Jun 29, 2009 3:24 pm
Contact:

Re: Fidelity vs. Vanguard

Post by Kevin M » Sun May 25, 2014 7:49 pm

555 wrote:
Kevin M wrote:
555 wrote:The Spartan lineup is very limited compared to Vanguard's array of low cost index funds. Fidelity doesn't even have a Total International Stock Index type fund.
Although I agree that Vanguard has a much broader selection of low-cost index funds, Fidelity does offer the Spartan Global Ex-US fund, which is a total international index fund (unlike the fund they call Total International, which does not include emerging markets).

Kevin
You are right about the countries covered by these two funds. But they are large cap funds, while Vanguard's Total International Stock Index fund is all caps. Fidelity's "Global" fund misses about 12% of the market.

Compare the styleboxes.
http://portfolios.morningstar.com/fund/ ... ture=en-US
http://portfolios.morningstar.com/fund/ ... ture=en-US
Maybe true, but doesn't seem to matter much:

Image

Blue and orange are Spartan Global ex-US and Vanguard Total International, light green is Fidelity Total International (developed markets). Clearly the inclusion of emerging markets has a significant impact, while any missing small-cap has negligible impact.

Vanguard Total International actually tracked the same index as Spartan Global ex-US (MSCI ACWI ex USA) until June 2013, when it switched to FTSE Global All Cap ex US.

In general I'd rather own a Vanguard fund, since I trust them more in all kinds of ways, but I'd be thrilled to have access to the Spartan Global Ex-US fund in a 401k, for example. EDIT: and would be happy to use the Spartan fund as a tax-loss-harvesting partner (prior to its creation I used a combination of Fidelity Total International and Vanguard Emerging Markets for TLH, and continue to hold that combo in my portfolio after large gains).

Kevin
Wiki ||.......|| Suggested format for Asking Portfolio Questions (edit original post)

555
Posts: 4955
Joined: Thu Dec 24, 2009 7:21 am

Re: Fidelity vs. Vanguard

Post by 555 » Sun May 25, 2014 8:37 pm

Kevin M, I basically agree with all you're saying except
Vanguard Total International Stock Index did not use
MSCI ACWI ex USA
It used
MSCI ACWI ex USA IMI (IMI=Investable Market Index)
and the latter part refers to the inclusion of small caps.

It's true that a large cap and an all cap fund will usually track each other closely, but I prefer the extra diversification.

It's one more example of Vanguard doing something better.

denovo
Posts: 4423
Joined: Sun Oct 13, 2013 1:04 pm

Re: Fidelity vs. Vanguard

Post by denovo » Sun May 25, 2014 8:50 pm

ogd wrote:
placeholder wrote:
ogd wrote:The reason is both Fidelity and TD have profit incentives to put you in higher-cost assets and will more or less subtly push you towards that direction.
I have never had that experience.
placeholder: see several posters above, and I've seen it at Schwab as well. On the theoretical level, you can't deny that the incentive exists and in the best case it's only corporate policy that keeps them from being more aggressive about it.

Like I said, it might not be worth much to you, but it's an argument to consider.
When I opened up my account with TDAmeritrade I got a call from the local office calling about their "services". I politely told them I manage my own investments and was not interested and to refuse me from their call sheets. That was 3 years ago. No calls since.

To the OP, I would consider holding vanguard etf's with tdameritrade. You can purchase them for free, and their customer service and interface is superior to vanguard.
"Don't trust everything you read on the Internet"- Abraham Lincoln

User avatar
Kalo
Posts: 526
Joined: Sat May 25, 2013 1:01 pm

Re: Fidelity vs. Vanguard

Post by Kalo » Sun May 25, 2014 9:57 pm

I have all my retirement money at Vanguard.

It's partly that I admire Jack Bogle and the company he started.

The other reason is that in the back of my mind, there's something about doing business with firms that are providing their customers with clearly inferior products, even if they also have superior products alongside of those, that gives me great pause. I want to reward Vanguard for doing the right thing by giving them my business. I'm doing it on principle. And I want Vanguard to survive and to thrive so that low cost funds will continue to be available to the general public (and to me) in the future. Fidelity, Scwab, and Scottrade are imitating Vanguard, in part, using a loss leader strategy. Vanguard is the real deal. Mutually owned, low cost.

I've never had an issue with Vanguard's service or website that was not satisfactory and in most instances exemplary.

Kalo
"When people say they have a high risk tolerance, what they really mean is that they are willing to make a lot of money." -- Ben Stein/Phil DeMuth - The Little Book of Bullet Proof Investing.

User avatar
JonnyDVM
Posts: 1760
Joined: Wed Feb 12, 2014 6:51 pm
Location: Atlanta, GA

Re: Fidelity vs. Vanguard

Post by JonnyDVM » Sun May 25, 2014 10:59 pm

Let me know when vanguards interface is 80% as good as fidelities and I'll consider switching. Otherwise with the spartan advantage funds I just don't see why it's worth the hassle. Yes, I'd like fidelity to offer a spartan small cap international fund or funds that are specifically value. I paid I think $7.95 to buy VSS through fidelity. No big deal. Funny enough, the graphs posted seem to indicate that VSS was a waste of $7.95. Also, fidelity offered cash management accounts which are essentially free ATM checking accounts. Nice little perk.
Sometimes the questions are complicated and the answers are simple. -Dr. Seuss

placeholder
Posts: 4023
Joined: Tue Aug 06, 2013 12:43 pm

Re: Fidelity vs. Vanguard

Post by placeholder » Mon May 26, 2014 2:09 am

stlutz wrote:Who one chooses as their custodian vs. their asset manager are different questions.
Indeed as most of my holding outside of the 401k are Vanguard products just not held at Vanguard in fact some are at brokerages that have no inexpensive funds of their own to offer but I don't care.

placeholder
Posts: 4023
Joined: Tue Aug 06, 2013 12:43 pm

Re: Fidelity vs. Vanguard

Post by placeholder » Mon May 26, 2014 2:10 am

Wildebeest wrote:I am a believer that if John C Bogle had not started Vanguard we would be paying ER's of 1 % or higher and while index funds would exist, the cost would be much higher.
And I think that someone else would have figured out that same niche and we'd be near where we are today but we'll never know and speculation is pretty pointless.

TheScarletPimpernel
Posts: 33
Joined: Sat Mar 29, 2014 4:22 am

Re: Fidelity vs. Vanguard

Post by TheScarletPimpernel » Mon May 26, 2014 3:23 am

I would suggest you also look at Schwab for customer service.

User avatar
Kevin M
Posts: 11280
Joined: Mon Jun 29, 2009 3:24 pm
Contact:

Re: Fidelity vs. Vanguard

Post by Kevin M » Mon May 26, 2014 1:33 pm

555 wrote: Vanguard Total International Stock Index did not use
MSCI ACWI ex USA
It used
MSCI ACWI ex USA IMI (IMI=Investable Market Index)
and the latter part refers to the inclusion of small caps.
Interesting.
555 wrote:It's true that a large cap and an all cap fund will usually track each other closely, but I prefer the extra diversification.

It's one more example of Vanguard doing something better.
Agreed. Since I'm already biased toward Vanguard, the Spartan GexUS fund wouldn't sway me toward Fidelity, but if I were biased toward Fidelity, it would be good enough for my international exposure to keep me there.

Kevin
Wiki ||.......|| Suggested format for Asking Portfolio Questions (edit original post)

User avatar
abuss368
Posts: 17205
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Fidelity vs. Vanguard

Post by abuss368 » Tue May 27, 2014 10:42 am

We came back to Vanguard after many years in the evil stock picking world. Vanguard statements and online analysis provides more information than I need.

It has been the best financial decision we ever made.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

User avatar
Mursili
Posts: 103
Joined: Tue May 15, 2012 8:32 pm

Re: Fidelity vs. Vanguard

Post by Mursili » Thu May 29, 2014 9:41 pm

ogd wrote:On the theoretical level, you can't deny that the incentive exists and in the best case it's only corporate policy that keeps them from being more aggressive about it.
If we are to consider this theoretically - as opposed to considering it based on the current evidence - if, one day, one fund manager spoke up and said "We lost all of our clients money/shares. We do not know where they went," then I would argue that the people at Vanguard will have much less incentive to care (since they may only lose their jobs) while the owners of Fidelity will have a much greater incentive to care (since they may lose all of the riches they have amassed). This kind of motivation has been thought about before, even with respect to our nuclear deterrent.

Talking about theoretical incentives does not really help. Whatever the reason that Fidelity offers low-cost investing options now will likely continue into the future. So, yes, I can deny that "the incentive exists."

Still, the choice of who you want to deal with in regard to your money is entirely personal. Luckily the competition available in an appropriately regulated free market (which I think we have here) allows you to choose many options and you will likely not be too much worse off regardless of your choice.
When it comes to havoc, no one wreaks like me! - Dr. Heinz Doofenshmirtz

User avatar
ogd
Posts: 4875
Joined: Thu Jun 14, 2012 11:43 pm

Re: Fidelity vs. Vanguard

Post by ogd » Thu May 29, 2014 10:01 pm

Mursili wrote:Talking about theoretical incentives does not really help. Whatever the reason that Fidelity offers low-cost investing options now will likely continue into the future. So, yes, I can deny that "the incentive exists."
See, I don't think you can. Maybe I shouldn't have used the world "theoretical" which invites the verbal disdain for theoretical so fashionable in discussions and just say "the incentive exists", because it does. It's a for profit company and higher fund expenses and 12b-1 fees help profits. It's as simple as that.

Of course they prefer happy low-cost customers to departing customers. But what they prefer even more is happy high-cost customers, blissfully unaware of the alternatives. I think there's plenty of evidence for the subtle pushes, even on this thread, but also in the selection of 401k funds they generally offer, for example the prevalence of the active target funds vs the passive ones, or the size of their active funds vs Spartan, or if you wanted to really dig into it I'm sure the provenance of a good chunk of reported earnings would be an indicator.

You can say that this is not important to you, or that they are doing a fine job balancing your interest, or anything inbetween. But you can't claim that it's not better for Fidelity or Schwab to steer you in the higher-cost direction.

denovo
Posts: 4423
Joined: Sun Oct 13, 2013 1:04 pm

Re: Fidelity vs. Vanguard

Post by denovo » Thu May 29, 2014 11:17 pm

ogd wrote:
Mursili wrote:Talking about theoretical incentives does not really help. Whatever the reason that Fidelity offers low-cost investing options now will likely continue into the future. So, yes, I can deny that "the incentive exists."
See, I don't think you can. Maybe I shouldn't have used the world "theoretical" which invites the verbal disdain for theoretical so fashionable in discussions and just say "the incentive exists", because it does. It's a for profit company and higher fund expenses and 12b-1 fees help profits. It's as simple as that.

Of course they prefer happy low-cost customers to departing customers. But what they prefer even more is happy high-cost customers, blissfully unaware of the alternatives. I think there's plenty of evidence for the subtle pushes, even on this thread, but also in the selection of 401k funds they generally offer, for example the prevalence of the active target funds vs the passive ones, or the size of their active funds vs Spartan, or if you wanted to really dig into it I'm sure the provenance of a good chunk of reported earnings would be an indicator.

You can say that this is not important to you, or that they are doing a fine job balancing your interest, or anything inbetween. But you can't claim that it's not better for Fidelity or Schwab to steer you in the higher-cost direction.
Vanguard has employees that work for an income. They also have fund managers and executive management that work for an income. Your logic could apply to Vanguard too since higher expenses could mean more income for everyone mentioned.
"Don't trust everything you read on the Internet"- Abraham Lincoln

feh
Posts: 1340
Joined: Sat Dec 15, 2012 11:39 am

Re: Fidelity vs. Vanguard

Post by feh » Fri May 30, 2014 10:41 am

JonnyDVM wrote:Let me know when vanguards interface is 80% as good as fidelities and I'll consider switching. Otherwise with the spartan advantage funds I just don't see why it's worth the hassle. Yes, I'd like fidelity to offer a spartan small cap international fund or funds that are specifically value. I paid I think $7.95 to buy VSS through fidelity. No big deal. Funny enough, the graphs posted seem to indicate that VSS was a waste of $7.95. Also, fidelity offered cash management accounts which are essentially free ATM checking accounts. Nice little perk.
We have a brokerage account at Vanguard, but 98% of our funds are held at Fidelity. The only reason we opened the VG account was due to regular purchases of VMLTX, which would've been expensive if done through Fido.

For buy & hold investors, the $8 fee to buy VG ETFs from Fido is irrelevant. We own both VSS and VBR through Fidelity.

User avatar
ogd
Posts: 4875
Joined: Thu Jun 14, 2012 11:43 pm

Re: Fidelity vs. Vanguard

Post by ogd » Fri May 30, 2014 11:01 am

denovo wrote:Vanguard has employees that work for an income. They also have fund managers and executive management that work for an income. Your logic could apply to Vanguard too since higher expenses could mean more income for everyone mentioned.
Ah, but this is not how it works. The employees and management are salaried, and while they probably have performance incentives there is no reason for the performance metrics to be tied to higher expenses as opposed to other things like retention or AUM, because the profits from higher expenses go back to the owners of Vanguard, which are the mutual funds shareholders, i.e. us. What's missing (in a good way) is the third party owners/shareholders who benefit from higher expenses without being the ones who pay them. This is a fundamental difference and it's why you'll never hear Vanguard recommending higher expense funds, or keeping theirs unnecessarily high, or recommending external funds with 12b-1 fees.

Fund managers of active funds are hired and they have no decision power. So they never come into play.

ab80
Posts: 112
Joined: Wed Jul 17, 2013 2:35 pm

Re: Fidelity vs. Vanguard

Post by ab80 » Fri May 30, 2014 5:18 pm

Perhaps a little OT, but does Fidelity charge a fee to close a taxable brokerage or cash management account? I've heard many times about charging $50 to close an IRA, but never saw anything about taxable accounts.

placeholder
Posts: 4023
Joined: Tue Aug 06, 2013 12:43 pm

Re: Fidelity vs. Vanguard

Post by placeholder » Fri May 30, 2014 5:58 pm

ab80 wrote:Perhaps a little OT, but does Fidelity charge a fee to close a taxable brokerage or cash management account? I've heard many times about charging $50 to close an IRA, but never saw anything about taxable accounts.
Not according to this (and jibes with recent personal experience):
http://www.onlinebrokerrev.com/commissi ... r-fees.php

Post Reply