Zero Fees: Fidelity Lower than Vanguard

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bhwabeck3533
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Zero Fees: Fidelity Lower than Vanguard

Post by bhwabeck3533 » Sun Apr 14, 2019 7:19 am

In April's AARP Bulletin, in her column Jane Bryant Quinn states "Fidelity is now the lowest-cost provider of broad-market index funds, but the dollar difference with competitors such as Charles Schwab and Vanguard are small."

Is anyone moving over to Fidelity's Zero Total Market Index Fund (or their other zero fund investment products)? What are your arguments for staying in Vanguard index funds versus the switch to Fidelity's equivalent offerings?

Jack FFR1846
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Re: Zero Fees: Fidelity Lower than Vanguard

Post by Jack FFR1846 » Sun Apr 14, 2019 7:29 am

The majority of my IRA was already at Fidelity. With the introduction of Zero funds, I thought about it for a few days and split my equity position in half there. In the mean time, Fidelity changed the fees on their other funds (lower), removing the higher minimum, lower fee separators. Since that time, FZROX (US equity) has very slightly outperformed the non-zero fund. As of Friday:

FZROX: $316,611.98

FSKAX: $316,280.86

So not a big difference, but some. This is an IRA, so dividends and taxes are of no concern to me.

After a total snafu by Vanguard, I moved my account there to TDAmeritrade. I called tried to convert VTMGX to VEA (just going to the ETF) and was told I would have to sell the mutual fund, let it settle and then buy the ETF. They even sent me documents supporting that (wrong) answer. That's not what I've read for years here, so came to the forum. I was then provided with the double secret telephone number for correct answers from Vanguard. I called and converted without getting out of the market. After this, I had zero confidence that Vanguard would give me correct information and dumped them.
Bogle: Smart Beta is stupid

anil686
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Re: Zero Fees: Fidelity Lower than Vanguard

Post by anil686 » Sun Apr 14, 2019 7:45 am

Due to the tax efficiency, I still use VG index funds in taxable. If I used ETFs, I would use ishares ITOT and IXUS instead. In tax deferred accounts I prefer balanced funds (target date funds) due to behavioral issues and less tinkering and if I were at Fidelity - I would use their index freedom TR funds. But I have my IRA and 401K plans at VG and use their Target date funds...

We will have to see, but I already thought VG had free total market funds when you thrown in the securities lending. In the annual reports, it looks like it matches the index or sometimes comes out a little ahead...

student
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Re: Zero Fees: Fidelity Lower than Vanguard

Post by student » Sun Apr 14, 2019 7:46 am

I have no plan on switching any time soon because
1) Zero fees funds are not available in my 403b and I do not want to switch in my taxable account due to capital gain.
2) They are based on different indices so who knows whether the small difference in ER will make a difference.
Last edited by student on Sun Apr 14, 2019 7:50 am, edited 2 times in total.

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whodidntante
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Re: Zero Fees: Fidelity Lower than Vanguard

Post by whodidntante » Sun Apr 14, 2019 7:47 am

My HSA is 100% invested in the Fidelity ZERO International fund, and the small Roth account I have there is too. I would not transfer assets to buy a zero fund and I think other companies have good low cost funds. I did sell a Vanguard International Index fund in my 401k that cost more to compensate for the funds I bought in my HSA and Roth, i.e. to keep my desired asset allocation. The ZERO International fund has the largest cost difference versus Vanguard funds, but it's still not much. I would buy it opportunistically.

slick_dealer_05
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Re: Zero Fees: Fidelity Lower than Vanguard

Post by slick_dealer_05 » Sun Apr 14, 2019 7:59 am

Buying FZILX since last August in taxable acct - $1000/week of recurring/automated investment.
Our 401k provider moved from Vanguard to Fidelity as well in 2017 so it helped with the transition.
Very happy with Fidelity so far - much easier to get hold of customer service.

rkhusky
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Re: Zero Fees: Fidelity Lower than Vanguard

Post by rkhusky » Sun Apr 14, 2019 8:34 am

Difference in er is too small to bother transferring IRA’s. Plus tax efficiency favors Vanguard for taxable.

Dandy
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Re: Zero Fees: Fidelity Lower than Vanguard

Post by Dandy » Sun Apr 14, 2019 11:13 am

I guess inertia plays a big role when you have been with Vanguard for decades and have done well. But, I also like the low cost DNA the firm has. Fidelity and others are coming to the table with lower costs because they are being forced to not because it is in their DNA. Nothing wrong with trying to make a profit, they surely have invested more in their web site and other products but so far Vanguard has met all our needs so a few basis points won't likely make me switch.

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Phineas J. Whoopee
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Re: Zero Fees: Fidelity Lower than Vanguard

Post by Phineas J. Whoopee » Sun Apr 14, 2019 12:22 pm

A few basis points, call it four which is close enough, in my thoroughly non-leveraged portfolio equates to very few dollars a year, and we don't know what the Johnson family will decide in the future (including changing the composition of their self-created indexes). Mutual funds also pay expenses and sometimes collect income not reported in the expense ratio, but for an index fund one can look to see how well it tracks and get a good idea.

It's not worth the switch to the zero funds to me.

PJW

KyleAAA
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Re: Zero Fees: Fidelity Lower than Vanguard

Post by KyleAAA » Sun Apr 14, 2019 12:37 pm

There isn’t enough difference to matter anymore. Taking ERs from 0.3% to 0.04% was significant, but going from 0.04% to 0% is small. Plus, Vanguard’s funds are likely to be more tax efficient in taxable. If you are opening a brand new account you might choose fidelity, but it’s not worth switching if you already have substantial holdings IMO. I have my taxable account at fidelity and opt for the ishares ETFs over the Fidelity Zero funds.

deltaneutral83
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Re: Zero Fees: Fidelity Lower than Vanguard

Post by deltaneutral83 » Sun Apr 14, 2019 12:45 pm

anil686 wrote:
Sun Apr 14, 2019 7:45 am
Due to the tax efficiency, I still use VG index funds in taxable. If I used ETFs, I would use ishares ITOT and IXUS instead. In tax deferred accounts I prefer balanced funds (target date funds) due to behavioral issues and less tinkering and if I were at Fidelity - I would use their index freedom TR funds. But I have my IRA and 401K plans at VG and use their Target date funds...

We will have to see, but I already thought VG had free total market funds when you thrown in the securities lending. In the annual reports, it looks like it matches the index or sometimes comes out a little ahead...
Is the choice of ITOT/IXUS iShares for ETFs just a preference over Vanguard ETF's or is there more to it for you?

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