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

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

Post by LadyGeek » Thu Sep 13, 2018 4:10 pm

FYI - I retitled the thread to reflect the two additional funds.

The OP can change the thread title further by editing the Subject: line in Post #1.
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Re: Fidelity Files for Four Fidelity ZERO℠ Funds (0.00% ER)

Post by Daitokuji » Thu Sep 13, 2018 6:40 pm

It's only been a little over 1 month but Vanguard's VTI/VTSAX has outperformed FZROX by about 0.5%.

The free FZROX has been outperformed by the equivalent funds from not only Vanguard and Schwab and iShares, but even Fidelity's own total stock market index fund, FSTMX.

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

Post by tj » Thu Sep 13, 2018 6:52 pm

Daitokuji wrote:
Thu Sep 13, 2018 6:40 pm
It's only been a little over 1 month but Vanguard's VTI/VTSAX has outperformed FZROX by about 0.5%.

The free FZROX has been outperformed by the equivalent funds from not only Vanguard and Schwab and iShares, but even Fidelity's own total stock market index fund, FSTMX.
To actually compare the returns, we would have to know when it actually started buying securities. Most funds start out with cash positions as they gather assets....

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

Post by Daitokuji » Thu Sep 13, 2018 6:58 pm

I did a comparison of the results on morning star and you can see it is the sole laggard. Should it not be appropriate to evaluate the results yet?

https://imgur.com/yETapIm

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

Post by triceratop » Thu Sep 13, 2018 7:02 pm

Daitokuji wrote:
Thu Sep 13, 2018 6:58 pm
I did a comparison of the results on morning star and you can see it is the sole laggard. Should it not be appropriate to evaluate the results yet?

https://imgur.com/yETapIm
Now try a 1mo return, that is, excluding the first few days of existence.

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

Post by tj » Thu Sep 13, 2018 7:04 pm

Daitokuji wrote:
Thu Sep 13, 2018 6:58 pm
I did a comparison of the results on morning star and you can see it is the sole laggard. Should it not be appropriate to evaluate the results yet?

https://imgur.com/yETapIm

isn't it obvious that the only difference is in the early part of the graph?

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

Post by triceratop » Thu Sep 13, 2018 7:05 pm

tj wrote:
Thu Sep 13, 2018 7:04 pm
isn't it obvious that the only difference is in the early part of the graph?
Not obvious enough. My post should clear that up for those who still don't see it.
"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 Four Fidelity ZERO℠ Funds (0.00% ER)

Post by crumbone » Thu Sep 13, 2018 10:51 pm

Attempted to buy FZILX--Fidelity's transaction page is now listing FZILX and FZROX as "closed to new investments."

Anyone know what's going on here?

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

Post by gostars » Thu Sep 13, 2018 11:25 pm

Are you trying to buy through BrokerageLink in a workplace plan? The ZERO funds are only available through normal accounts, not workplace plans.

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

Post by TIAX » Fri Sep 14, 2018 12:59 am

https://www.sec.gov/Archives/edgar/data ... #410968989
Each Index is the property of FMRC, which has contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) to calculate and maintain the Indices.
Interesting. Fidelity is incapable of maintaining its own indexes.

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

Post by UpperNwGuy » Fri Sep 14, 2018 3:08 am

TIAX wrote:
Fri Sep 14, 2018 12:59 am
https://www.sec.gov/Archives/edgar/data ... #410968989
Each Index is the property of FMRC, which has contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) to calculate and maintain the Indices.
Interesting. Fidelity is incapable of maintaining its own indexes.
Incapable? You don’t know that. They outsourced it to a company that specializes in index development. Nothing unusual about that.

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

Post by Jack FFR1846 » Fri Sep 14, 2018 7:29 am

Yesterday's tally:

FSTVX is down $1.90 vs FZROX, for each account at $320k'ish.
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Re: Fidelity Files for Four Fidelity ZERO℠ Funds (0.00% ER)

Post by TIAX » Fri Sep 14, 2018 9:34 am

UpperNwGuy wrote:
Fri Sep 14, 2018 3:08 am
TIAX wrote:
Fri Sep 14, 2018 12:59 am
https://www.sec.gov/Archives/edgar/data ... #410968989
Each Index is the property of FMRC, which has contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) to calculate and maintain the Indices.
Interesting. Fidelity is incapable of maintaining its own indexes.
Incapable? You don’t know that. They outsourced it to a company that specializes in index development. Nothing unusual about that.
Right and, even though they have no experience constructing an index, they didn't think it was a good idea to "outsource" that.

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

Post by UpperNwGuy » Fri Sep 14, 2018 9:41 am

TIAX wrote:
Fri Sep 14, 2018 9:34 am
UpperNwGuy wrote:
Fri Sep 14, 2018 3:08 am
TIAX wrote:
Fri Sep 14, 2018 12:59 am
https://www.sec.gov/Archives/edgar/data ... #410968989
Each Index is the property of FMRC, which has contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) to calculate and maintain the Indices.
Interesting. Fidelity is incapable of maintaining its own indexes.
Incapable? You don’t know that. They outsourced it to a company that specializes in index development. Nothing unusual about that.
Right and, even though they have no experience constructing an index, they didn't think it was a good idea to "outsource" that.
What point are you trying to make? Your tone implies that there is something wrong with what Fidelity is doing.

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

Post by TIAX » Fri Sep 14, 2018 5:30 pm

UpperNwGuy wrote:
Fri Sep 14, 2018 9:41 am
TIAX wrote:
Fri Sep 14, 2018 9:34 am
UpperNwGuy wrote:
Fri Sep 14, 2018 3:08 am
TIAX wrote:
Fri Sep 14, 2018 12:59 am
https://www.sec.gov/Archives/edgar/data ... #410968989
Each Index is the property of FMRC, which has contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) to calculate and maintain the Indices.
Interesting. Fidelity is incapable of maintaining its own indexes.
Incapable? You don’t know that. They outsourced it to a company that specializes in index development. Nothing unusual about that.
Right and, even though they have no experience constructing an index, they didn't think it was a good idea to "outsource" that.
What point are you trying to make? Your tone implies that there is something wrong with what Fidelity is doing.
Not sure why you want me to repeat myself but my point is that Fidelity has little to no experience constructing indexes and perhaps expertise in this area is worth something.

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

Post by UpperNwGuy » Fri Sep 14, 2018 6:46 pm

TIAX wrote:
Fri Sep 14, 2018 5:30 pm
UpperNwGuy wrote:
Fri Sep 14, 2018 9:41 am
TIAX wrote:
Fri Sep 14, 2018 9:34 am
UpperNwGuy wrote:
Fri Sep 14, 2018 3:08 am
TIAX wrote:
Fri Sep 14, 2018 12:59 am
https://www.sec.gov/Archives/edgar/data ... #410968989

Interesting. Fidelity is incapable of maintaining its own indexes.
Incapable? You don’t know that. They outsourced it to a company that specializes in index development. Nothing unusual about that.
Right and, even though they have no experience constructing an index, they didn't think it was a good idea to "outsource" that.
What point are you trying to make? Your tone implies that there is something wrong with what Fidelity is doing.
Not sure why you want me to repeat myself but my point is that Fidelity has little to no experience constructing indexes and perhaps expertise in this area is worth something.
Do you think Vanguard has such expertise? Schwab? Merrill Edge? TD Ameritrade? I simply don't understand why you are beating up Fidelity for not doing what other brokerages also don't do.

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

Post by Whakamole » Fri Sep 14, 2018 7:04 pm

TIAX wrote:
Fri Sep 14, 2018 5:30 pm
Not sure why you want me to repeat myself but my point is that Fidelity has little to no experience constructing indexes and perhaps expertise in this area is worth something.
It looks like S&P has been doing this for Fidelity's Factor ETFs already: https://customindices.spindices.com/?cu ... e=fidelity.

In fact https://us.spindices.com/custom-indices/ says:
S&P Dow Jones Custom Indices provides independently calculated solutions that our clients need to meet specific investment criteria. Clients can select custom indices that are a slice of one of our existing indices or white label most of our indices across all asset classes. Drawing on our wealth of resources and significant industry knowledge, we construct, maintain and disseminate custom indices for investors, exchanges and ETF providers.
Perhaps the fund has the Fidelity name but it's white labeling an existing S&P index, or one they constructed especially for Fidelity.

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

Post by TIAX » Fri Sep 14, 2018 9:37 pm

UpperNwGuy wrote:
Fri Sep 14, 2018 6:46 pm
TIAX wrote:
Fri Sep 14, 2018 5:30 pm
UpperNwGuy wrote:
Fri Sep 14, 2018 9:41 am
TIAX wrote:
Fri Sep 14, 2018 9:34 am
UpperNwGuy wrote:
Fri Sep 14, 2018 3:08 am


Incapable? You don’t know that. They outsourced it to a company that specializes in index development. Nothing unusual about that.
Right and, even though they have no experience constructing an index, they didn't think it was a good idea to "outsource" that.
What point are you trying to make? Your tone implies that there is something wrong with what Fidelity is doing.
Not sure why you want me to repeat myself but my point is that Fidelity has little to no experience constructing indexes and perhaps expertise in this area is worth something.
Do you think Vanguard has such expertise? Schwab? Merrill Edge? TD Ameritrade? I simply don't understand why you are beating up Fidelity for not doing what other brokerages also don't do.
No, I don't think Vanguard has such expertise. And that's why Vanguard doesn't create its own indexes but relies on organizations like CRSP and FTSE that have extensive expertise.

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

Post by Whakamole » Fri Sep 14, 2018 9:59 pm

TIAX wrote:
Fri Sep 14, 2018 9:37 pm
No, I don't think Vanguard has such expertise. And that's why Vanguard doesn't create its own indexes but relies on organizations like CRSP and FTSE that have extensive expertise.
Where in the prospectus does it state that Fidelity created this index?

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

Post by TIAX » Sat Sep 15, 2018 12:22 am

Whakamole wrote:
Fri Sep 14, 2018 9:59 pm
TIAX wrote:
Fri Sep 14, 2018 9:37 pm
No, I don't think Vanguard has such expertise. And that's why Vanguard doesn't create its own indexes but relies on organizations like CRSP and FTSE that have extensive expertise.
Where in the prospectus does it state that Fidelity created this index?
https://www.sec.gov/Archives/edgar/data ... #401380692
Each index listed above (each an "Index" and together, the "Indices") was created by FMRC using a rules-based proprietary index methodology described for each fund under the heading "Principal Investment Strategies" in the "Fund Basics - Investment Details" section of this prospectus.

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

Post by tj » Sat Sep 15, 2018 12:52 am

TIAX wrote:
Sat Sep 15, 2018 12:22 am
Whakamole wrote:
Fri Sep 14, 2018 9:59 pm
TIAX wrote:
Fri Sep 14, 2018 9:37 pm
No, I don't think Vanguard has such expertise. And that's why Vanguard doesn't create its own indexes but relies on organizations like CRSP and FTSE that have extensive expertise.
Where in the prospectus does it state that Fidelity created this index?
https://www.sec.gov/Archives/edgar/data ... #401380692
Each index listed above (each an "Index" and together, the "Indices") was created by FMRC using a rules-based proprietary index methodology described for each fund under the heading "Principal Investment Strategies" in the "Fund Basics - Investment Details" section of this prospectus.


So...they created it by outsourcing it to an expert. What is the issue?

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

Post by MisterBill » Sat Sep 15, 2018 12:59 am

TIAX wrote:
Fri Sep 14, 2018 9:37 pm
UpperNwGuy wrote:
Fri Sep 14, 2018 6:46 pm
TIAX wrote:
Fri Sep 14, 2018 5:30 pm
UpperNwGuy wrote:
Fri Sep 14, 2018 9:41 am
TIAX wrote:
Fri Sep 14, 2018 9:34 am

Right and, even though they have no experience constructing an index, they didn't think it was a good idea to "outsource" that.
What point are you trying to make? Your tone implies that there is something wrong with what Fidelity is doing.
Not sure why you want me to repeat myself but my point is that Fidelity has little to no experience constructing indexes and perhaps expertise in this area is worth something.
Do you think Vanguard has such expertise? Schwab? Merrill Edge? TD Ameritrade? I simply don't understand why you are beating up Fidelity for not doing what other brokerages also don't do.
No, I don't think Vanguard has such expertise. And that's why Vanguard doesn't create its own indexes but relies on organizations like CRSP and FTSE that have extensive expertise.
And doesn't Vanguard sell said index funds with their name on it? If so, how is that different than what Fidelity has done here?

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

Post by HEDGEFUNDIE » Sat Sep 15, 2018 1:18 am

The Fidelity U.S. Total Investable Market Index tracks up to 3000 US stocks, those that are at least $75M in market cap.

https://www.fidelity.com/bin-public/060 ... dology.pdf

The CRSP US Total Market Index (what Vanguard VTSAX uses) tracks up to 4000 US stocks, those that are at least $15M in market cap.

http://www.crsp.com/files/Equity-Indexe ... .pdf#page8

So the real debate here should be how you feel about having micro caps in your portfolio. It will definitely make enough of a difference to swamp out the expense ratio difference, but positive or negative I cannot say.

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

Post by TIAX » Sat Sep 15, 2018 2:08 pm

MisterBill wrote:
Sat Sep 15, 2018 12:59 am
TIAX wrote:
Fri Sep 14, 2018 9:37 pm
UpperNwGuy wrote:
Fri Sep 14, 2018 6:46 pm
TIAX wrote:
Fri Sep 14, 2018 5:30 pm
UpperNwGuy wrote:
Fri Sep 14, 2018 9:41 am


What point are you trying to make? Your tone implies that there is something wrong with what Fidelity is doing.
Not sure why you want me to repeat myself but my point is that Fidelity has little to no experience constructing indexes and perhaps expertise in this area is worth something.
Do you think Vanguard has such expertise? Schwab? Merrill Edge? TD Ameritrade? I simply don't understand why you are beating up Fidelity for not doing what other brokerages also don't do.
No, I don't think Vanguard has such expertise. And that's why Vanguard doesn't create its own indexes but relies on organizations like CRSP and FTSE that have extensive expertise.
And doesn't Vanguard sell said index funds with their name on it? If so, how is that different than what Fidelity has done here?
You really don't see the difference? Vanguard is using an expert at index construction to construct the indexes, whereas Fidelity is not.

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

Post by LadyGeek » Sat Sep 15, 2018 8:58 pm

^^^ Please double-check the SEC filing, which is the prospectus for Fidelity ZERO℠ International (FZILX) and Total Market (FZROX), August 1, 2018.

The entire paragraph, which I broke up into separate paragraphs for readability:
Each Index is the property of FMRC, which has contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) to calculate and maintain the Indices.

The Indices are not sponsored by S&P Dow Jones Indices LLC or its affiliates or its third party licensors, including Standard & Poor's Financial Services LLC and Dow Jones Trademark Holdings LLC (collectively, "S&P Dow Jones Indices"). S&P Dow Jones Indices will not be liable for any errors or omissions in calculating the Indices.

"Calculated by S&P Dow Jones Indices" and the related stylized mark(s) are service marks of S&P Dow Jones Indices and have been licensed for use by FMRC. S&P® is a registered trademark of Standard & Poor's Financial Services LLC, and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC.
The index is calculated by a S&P Opco, LLC a subsidiary of S&P Dow Jones. FMRC licenses use of the S&P Dow Jones name.

As noted earlier in Index Methodology Document disclaimer:
FMR CO. INC. has contracted with an independent calculation agent to calculate each Index.
Based on the SEC filing, it's S&P Opco, LLC.
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Re: Fidelity Files for Four Fidelity ZERO℠ Funds (0.00% ER)

Post by UpperNwGuy » Sat Sep 15, 2018 10:13 pm

TIAX wrote:
Sat Sep 15, 2018 2:08 pm
MisterBill wrote:
Sat Sep 15, 2018 12:59 am
TIAX wrote:
Fri Sep 14, 2018 9:37 pm
UpperNwGuy wrote:
Fri Sep 14, 2018 6:46 pm
TIAX wrote:
Fri Sep 14, 2018 5:30 pm

Not sure why you want me to repeat myself but my point is that Fidelity has little to no experience constructing indexes and perhaps expertise in this area is worth something.
Do you think Vanguard has such expertise? Schwab? Merrill Edge? TD Ameritrade? I simply don't understand why you are beating up Fidelity for not doing what other brokerages also don't do.
No, I don't think Vanguard has such expertise. And that's why Vanguard doesn't create its own indexes but relies on organizations like CRSP and FTSE that have extensive expertise.
And doesn't Vanguard sell said index funds with their name on it? If so, how is that different than what Fidelity has done here?
You really don't see the difference? Vanguard is using an expert at index construction to construct the indexes, whereas Fidelity is not.
There is no difference. Both Vanguard and Fidelity are using outside experts to construct indexes.

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

Post by TIAX » Sat Sep 15, 2018 10:33 pm

UpperNwGuy wrote:
Sat Sep 15, 2018 10:13 pm
TIAX wrote:
Sat Sep 15, 2018 2:08 pm
MisterBill wrote:
Sat Sep 15, 2018 12:59 am
TIAX wrote:
Fri Sep 14, 2018 9:37 pm
UpperNwGuy wrote:
Fri Sep 14, 2018 6:46 pm


Do you think Vanguard has such expertise? Schwab? Merrill Edge? TD Ameritrade? I simply don't understand why you are beating up Fidelity for not doing what other brokerages also don't do.
No, I don't think Vanguard has such expertise. And that's why Vanguard doesn't create its own indexes but relies on organizations like CRSP and FTSE that have extensive expertise.
And doesn't Vanguard sell said index funds with their name on it? If so, how is that different than what Fidelity has done here?
You really don't see the difference? Vanguard is using an expert at index construction to construct the indexes, whereas Fidelity is not.
There is no difference. Both Vanguard and Fidelity are using outside experts to construct indexes.
Incorrect. Fidelity constructed the indexes for these funds.

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

Post by Whakamole » Sat Sep 15, 2018 11:10 pm

TIAX wrote:
Sat Sep 15, 2018 12:22 am
Whakamole wrote:
Fri Sep 14, 2018 9:59 pm
TIAX wrote:
Fri Sep 14, 2018 9:37 pm
No, I don't think Vanguard has such expertise. And that's why Vanguard doesn't create its own indexes but relies on organizations like CRSP and FTSE that have extensive expertise.
Where in the prospectus does it state that Fidelity created this index?
https://www.sec.gov/Archives/edgar/data ... #401380692
Each index listed above (each an "Index" and together, the "Indices") was created by FMRC using a rules-based proprietary index methodology described for each fund under the heading "Principal Investment Strategies" in the "Fund Basics - Investment Details" section of this prospectus.
So Fidelity created the index by paying S&P to create an index based on certain factors, perhaps taking into account things that could reduce fund expenses, like the higher minimum market cap that removes some low-liquidity stocks, yearly rebalancing with an exception for certain corporate actions, etc. Whether that will impact investor returns in a measurable way is to be seen.

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

Post by triceratop » Sat Sep 15, 2018 11:12 pm

TIAX wrote:
Sat Sep 15, 2018 10:33 pm
UpperNwGuy wrote:
Sat Sep 15, 2018 10:13 pm
TIAX wrote:
Sat Sep 15, 2018 2:08 pm
MisterBill wrote:
Sat Sep 15, 2018 12:59 am
TIAX wrote:
Fri Sep 14, 2018 9:37 pm

No, I don't think Vanguard has such expertise. And that's why Vanguard doesn't create its own indexes but relies on organizations like CRSP and FTSE that have extensive expertise.
And doesn't Vanguard sell said index funds with their name on it? If so, how is that different than what Fidelity has done here?
You really don't see the difference? Vanguard is using an expert at index construction to construct the indexes, whereas Fidelity is not.
There is no difference. Both Vanguard and Fidelity are using outside experts to construct indexes.
Incorrect. Fidelity constructed the indexes for these funds.
They constructed the methodology but do not actually calculate the index, which is subcontracted out as described above.

I really still don't see how you've justified such a hyperbolic statement as the following, though.
Interesting. Fidelity is incapable of maintaining its own indexes.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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

Post by TIAX » Sat Sep 15, 2018 11:35 pm

triceratop wrote:
Sat Sep 15, 2018 11:12 pm
TIAX wrote:
Sat Sep 15, 2018 10:33 pm
UpperNwGuy wrote:
Sat Sep 15, 2018 10:13 pm
TIAX wrote:
Sat Sep 15, 2018 2:08 pm
MisterBill wrote:
Sat Sep 15, 2018 12:59 am

And doesn't Vanguard sell said index funds with their name on it? If so, how is that different than what Fidelity has done here?
You really don't see the difference? Vanguard is using an expert at index construction to construct the indexes, whereas Fidelity is not.
There is no difference. Both Vanguard and Fidelity are using outside experts to construct indexes.
Incorrect. Fidelity constructed the indexes for these funds.
They constructed the methodology but do not actually calculate the index, which is subcontracted out as described above.

I really still don't see how you've justified such a hyperbolic statement as the following, though.
Interesting. Fidelity is incapable of maintaining its own indexes.
https://www.fidelity.com/bin-public/060 ... dology.pdf
Index Committee
The index is maintained by Fidelity Investments Index Committee. The Index Committee is responsible for reviewing the design and composition of the indexes. The Committee meets periodically to review market conditions and index performance, or on an as-needed basis to address major market developments. In addition, the Committee reserves the right to exercise its discretion in making decisions with respect to Index Policies or actions. Fidelity Investments considers information about changes to its indexes and related matters to be potentially market moving and material. Therefore, all Index Committee discussions are confidential.

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

Post by triceratop » Sun Sep 16, 2018 12:13 am

What does that excerpt have to do with Fidelity being incapable of maintaining its own index?
"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 tj » Mon Sep 17, 2018 11:23 am

passiveTiger wrote:
Wed Aug 08, 2018 1:37 am
triceratop wrote:
Wed Aug 08, 2018 1:01 am
How do you know the Investor shares shareholders are subsidizing the Admiral shares investors, if you don’t know how many of each there are and the typical costs associated with each type of account?
  • The overall ER of the Vanguard Total Stock Market Index Fund for all classes is 0.053%.
  • Investors in the VTSMX Investor Shares class have an ER of 0.14%.
  • Every other share class ER is under 0.053%.
My guess is that Vanguard considers it a transient class that eventually leaves entirely, moves into Admiral Shares, or (best for Vanguard) sits dormant or is locked by some rule that does not permit Admiral Shares.
Don't forget that a lot of the assets in the Investor Share class is from the LifeStrategy and Target Retirement funds.

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

Post by Jack FFR1846 » Thu Sep 20, 2018 8:10 am

More fun on my little experiment, having split my equity position between fstvx and fzrox evenly.

Today's difference on $332k'ish in each account......$1.88
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Barry Barnitz
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Re: Fidelity Files for Four Fidelity ZERO℠ Funds (0.00% ER)

Post by Barry Barnitz » Thu Sep 20, 2018 12:11 pm

Hi:
tj wrote:
Mon Sep 17, 2018 11:23 am
passiveTiger wrote:
Wed Aug 08, 2018 1:37 am
triceratop wrote:
Wed Aug 08, 2018 1:01 am
How do you know the Investor shares shareholders are subsidizing the Admiral shares investors, if you don’t know how many of each there are and the typical costs associated with each type of account?
  • The overall ER of the Vanguard Total Stock Market Index Fund for all classes is 0.053%.
  • Investors in the VTSMX Investor Shares class have an ER of 0.14%.
  • Every other share class ER is under 0.053%.
My guess is that Vanguard considers it a transient class that eventually leaves entirely, moves into Admiral Shares, or (best for Vanguard) sits dormant or is locked by some rule that does not permit Admiral Shares.
Don't forget that a lot of the assets in the Investor Share class is from the LifeStrategy and Target Retirement funds.
Here is the breakdown of Vanguard fund-of-fund ownership of investor shares in constituent fund holdings:
The Vanguard fund-of-funds, which include the firm’s target date retirement, lifeStrategy, and managed-payout fund offerings, are by far the majority shareholders of investor shares in the funds used for portfolio allocations. As of July 31, 2018, the breakdown of investor share ownership is as follows:
  • The total net asset value of Vanguard Total Stock Market investor shares is $131,200,000,000.00; the fund-of -funds hold $119,126,213,100.00, or 90.80%, of these total TSM investor shares.
  • The total net asset value of Vanguard Total International Stock Market investor shares is $131,600,000,000.00; the fund-of-funds hold $79,069,196,900.00, or 60.08%, of these Total International Stock Market investor shares.
  • The total net asset value of Vanguard Total International Bond Market investor shares is $27,700,000,000.00; the funds-of funds hold $26,993,987,000.00, or 97.45%, of these Total International Stock Market investor shares.
  • The total net asset value of the Vanguard Total Bond Market II investor shares is $ 95,800,000,000.00; the fund is held exclusively by Vanguard fund-of-funds.
  • The total net asset value of the Vanguard Short-Term Inflation-Protected Securities investor shares is $6,500,000,000.00; the fund-of-funds hold $6,411,000,000.00, or 98.63% of these Short-Term Inflation-Protected Securities investor shares. (See Google sheet for calculations.) --->Read more.

regards,
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Whakamole
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Re: Fidelity Files for Four Fidelity ZERO℠ Funds (0.00% ER)

Post by Whakamole » Thu Sep 20, 2018 12:28 pm

Barry Barnitz wrote:
Thu Sep 20, 2018 12:11 pm
Hi:
tj wrote:
Mon Sep 17, 2018 11:23 am
passiveTiger wrote:
Wed Aug 08, 2018 1:37 am
triceratop wrote:
Wed Aug 08, 2018 1:01 am
How do you know the Investor shares shareholders are subsidizing the Admiral shares investors, if you don’t know how many of each there are and the typical costs associated with each type of account?
  • The overall ER of the Vanguard Total Stock Market Index Fund for all classes is 0.053%.
  • Investors in the VTSMX Investor Shares class have an ER of 0.14%.
  • Every other share class ER is under 0.053%.
My guess is that Vanguard considers it a transient class that eventually leaves entirely, moves into Admiral Shares, or (best for Vanguard) sits dormant or is locked by some rule that does not permit Admiral Shares.
Don't forget that a lot of the assets in the Investor Share class is from the LifeStrategy and Target Retirement funds.
Here is the breakdown of Vanguard fund-of-fund ownership of investor shares in constituent fund holdings:
The Vanguard fund-of-funds, which include the firm’s target date retirement, lifeStrategy, and managed-payout fund offerings, are by far the majority shareholders of investor shares in the funds used for portfolio allocations. As of July 31, 2018, the breakdown of investor share ownership is as follows:
  • The total net asset value of Vanguard Total Stock Market investor shares is $131,200,000,000.00; the fund-of -funds hold $119,126,213,100.00, or 90.80%, of these total TSM investor shares.
  • The total net asset value of Vanguard Total International Stock Market investor shares is $131,600,000,000.00; the fund-of-funds hold $79,069,196,900.00, or 60.08%, of these Total International Stock Market investor shares.
  • The total net asset value of Vanguard Total International Bond Market investor shares is $27,700,000,000.00; the funds-of funds hold $26,993,987,000.00, or 97.45%, of these Total International Stock Market investor shares.
  • The total net asset value of the Vanguard Total Bond Market II investor shares is $ 95,800,000,000.00; the fund is held exclusively by Vanguard fund-of-funds.
  • The total net asset value of the Vanguard Short-Term Inflation-Protected Securities investor shares is $6,500,000,000.00; the fund-of-funds hold $6,411,000,000.00, or 98.63% of these Short-Term Inflation-Protected Securities investor shares. (See Google sheet for calculations.) --->Read more.

regards,
Perhaps a dumb question:

My understanding is that the idea of investor shares charging a higher ER is that smaller accounts tend to be more expensive to maintain, and Vanguard strives to charge cost.

However that seems in conflict with the above; if one of the fund-of-funds is a "shareholder" of (for instance) Vanguard Total Market, their investment is significant, and surely they could afford one of the institutional levels. The fund-of-funds is the shareholder, not the investor in the fund-of-funds.

Of course some of these fund-of-funds require a small minimum ($1K) and those accounts may cost more to manage, but then it seems more appropriate that (a) the fund-of-funds buy the cheapest share class they can, and (b) Vanguard should add an additional maintenance fee for the fund-of-funds, depending on balance (e.g. have "investor" share classes that add some basis points for management, "admiral" shares that add fewer basis points, etc.), whatever their cost is.

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

Post by Mursili » Fri Sep 21, 2018 10:41 am

Jack FFR1846 wrote:
Thu Sep 20, 2018 8:10 am
More fun on my little experiment, having split my equity position between fstvx and fzrox evenly.

Today's difference on $332k'ish in each account......$1.88
Remember this is bogleheads where the smallest difference in cost or performance can be analyzed to death. So the real question is which one of the funds is outperforming the other (by 0.0006%)?
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Re: Fidelity Files for Four Fidelity ZERO℠ Funds (0.00% ER)

Post by ruralavalon » Fri Sep 21, 2018 10:59 am

Mursili wrote:
Fri Sep 21, 2018 10:41 am
Jack FFR1846 wrote:
Thu Sep 20, 2018 8:10 am
More fun on my little experiment, having split my equity position between fstvx and fzrox evenly.

Today's difference on $332k'ish in each account......$1.88
Remember this is bogleheads where the smallest difference in cost or performance can be analyzed to death. So the real question is which one of the funds is outperforming the other (by 0.0006%)?
Are you saying that some differences are so tiny as to be unimportant? :shock:
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Bodhi312
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Re: Fidelity Files for Four Fidelity ZERO℠ Funds (0.00% ER)

Post by Bodhi312 » Fri Sep 21, 2018 11:13 am

TIAX wrote:
Fri Sep 14, 2018 12:59 am
https://www.sec.gov/Archives/edgar/data ... #410968989
Each Index is the property of FMRC, which has contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) to calculate and maintain the Indices.
Interesting. Fidelity is incapable of maintaining its own indexes.
If they didn’t use a third party to “maintain” their indices, they would be accused of manipulating the construction/calculation of those indices. By using an “in house” index and a third party to maintain/calculate the indices is a reasonable way to avoid the appearance of impropriety.

I would be more worried if they weren’t doing this and while advertising that they’d beat their own benchmark.

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