User:Lexor/Fidelity

Fidelity Investments Inc is a Boston-based mutual fund and financial services company and Vanguard's biggest competitor.

"'It's what I would do if I were Fidelity...I don't see that there is a really good competitive response...a winning response (for Vanguard).' -Jack Bogle, October 2018 on Fidelity ZERO cost index funds"

In recent years Fidelity has been notable for offering the lowest cost mutual funds, the first and only zero expense ratio index funds, commission free ETFs, no investment minimums and one of the first brokers to offer partial share investing. Fidelity was also one of the first brokers to combine its Institutional Premium class funds with Retail class funds and did so more completely than competitors like Vanguard. This resulted in individual investors having access to funds with extremely low expense ratios, well below what is available to individual investors at Vanguard, even compared to the $3,000-minimum Admiral Class shares.

Boglehead-style investing at Fidelity
The building blocks of Boglehead-style investing are low-expense-ratio index mutual funds and/or ETFs. Fidelity offers the lowest cost index funds in the industry including 4 zero cost index funds and commission free ETFs.

Boglehead philosophy leverages low cost broad index funds. Fidelity has the lowest cost broad market index funds while Vanguard offers more narrow index funds and ETFs at higher costs (although not as many as Blackrock's iShares).

Here are some notes on how to do Boglehead style investing at Fidelity. Writers have striven for accuracy, but investors should verify information before taking action. Fidelity also provides a comparison of its funds to Vanguard.

Tools for Boglehead-style investing

 * Fidelity offers the lowest expense ratios in the industry, which can save investors tens of thousands in costs over Vanguard during their investment time-frame - depending on their unique situation.
 * Fidelity funds benefit more from security lending than Vanguard and Schwab funds.
 * Fidelity funds have higher tracking precision to their benchmarks than Vanguard funds (lower tracking error)
 * Fidelity offers 4 ZERO Index Funds with a 0.00% expense ratio, the Fidelity ZERO Total Market Index Fund and the Fidelity ZERO International Index Fund, Fidelity Large Cap ZERO Index Fund and Fidelity Extended Market ZERO Index Fund. These funds track proprietary Fidelity indexes.
 * Fidelity offers commission free trades on individual stocks and ETFs
 * Fidelity eliminated the minimum investment requirement on all its mutual funds and allows partial share investing of ETFs and stocks
 * Fidelity no longer lists a charge for short-term sales of its funds; however, all ETF sales are subject to an activity assessment fee (from $0.01 to $0.03 per $1,000 of principal.)
 * Fidelity offers individual treasury bonds (both nominal and TIPS) at auction free of commission or any markup or fees if you place your orders online. There is no limit on account size. No separate account is needed. The minimum purchase is $1,000.

General strategy for Boglehead-style investing

 * In tax exempt accounts hold Fidelity index funds.
 * Taxable accounts should invest in ETFs from iShares, Schwab, State Street or Vanguard and leverage Fidelity's partial share investing capability, which allows you to invest by dollar amount rather than number of shares. ETFs should be used due to Vanguard's patent that allows Vanguard mutual funds to be more tax efficient than other broker's mutual funds. The patent expires in March 2021 and while it is possible that Fidelity mutual funds will use the same strategy to gain tax efficiency after March 2021, no such announcement has been made by Fidelity.

Index funds

 * This table shows the rough correspondence between Fidelity, Vanguard and Schwab mutual funds. The lowest expense ratios are in bold. In many cases they track different indexes so they are not precisely equivalent, however they are very similar. Bond funds have different durations and therefore interest risk. Other tickers can be found in the appendix to the press release.

ETFs at Fidelity

 * This table shows the rough correspondence between Blackrock, Schwab ETFs, StateStreet and Vanguard that can be purchased commission free at Fidelity. In many cases they track different indexes so they are not precisely equivalent, however they are very similar. The lowest expense ratios are in bold, but keep in mind the importance of tax efficiency in a taxable account.

TODO - Table of ETFs

HSA and ABLE accounts
In these products - which are often abused with extremely high expenses - Fidelity has arguably the most compelling offering in the industry. You can use low cost Fidelity index funds in your HSA and ABLE accounts and Fidelity does not charge any additional fees.