Fidelity

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Fidelity Investments is the marketing name for FMR LLC, a giant Boston-based mutual fund company and financial supermarket, and Vanguard's biggest competitor in recent years. [1] Fidelity is sometimes credited with transforming the mutual fund business from a stodgy conservative world of funds managed by committee into the model of active funds managed by stock-picking superstar managers.

Boglehead-style investing at Fidelity

The building blocks of Boglehead-style investing are low-expense-ratio index mutual funds and/or ETFs. Vanguard fans would suggest that Vanguard has the best and most complete lineup of such funds, and that the most convenient place to hold Vanguard mutual funds is directly at Vanguard. Thus, the Bogleheads forum and Wiki tends to be Vanguard-oriented.

But investing according to the Boglehead philosophy certainly does not require you to invest at Vanguard or use Vanguard products. Here are some notes on how to do it 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. See: Fidelity Redefines Investing Appendix, Fidelity Investments, August, 2018.[2]

Tools for Boglehead-style investing

  • Fidelity offers no-commission trades on 240 BlackRock iShares ETFs (Fidelity account required to view list) and 25 Fidelity ETFs covering various factor, sector, stock, and bond categories. The iShares ETFs in particular satisfy the criteria of "low-cost index ETFs" that cover most asset classes an ordinary investor would need. As of August 1, 2018, Fidelity no longer lists a charge for short-term sales of these 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 22 Fidelity Index Funds (formerly called Spartan funds). These are Fidelity's counterpart to Vanguard, very-low-expense-ratio index funds. Effective August 1, 2018, Fidelity eliminated the minimum investment requirement on all these funds, and adjusted all funds to match the former Institutional Premium class funds, and announced that the various classes of each fund will be merged in November, 2018. This change results 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 $10,000-minimum Admiral Class shares.
  • On August 3, 2018, Fidelity began offering two new Fidelity ZERO Index Funds with a 0.00% expense ratio, the Fidelity ZERO Total Market Index Fund and the Fidelity ZERO International Index Fund. These funds track proprietary Fidelity indexes covering the total US stock market and the global ex-US mid-/large-cap markets respectively.
  • Fidelity mutual funds do not share the same structure that allows Vanguard mutual funds to avoid distributing capital gains, which may have tax consequences for investors. Those investing in taxable accounts may wish to consider using the iShares ETFs instead.
  • This table shows the rough correspondence between Vanguard Admiral Class funds and low-cost no transaction fee mutual funds and commission-free ETFs available at Fidelity. In many cases they track different indexes and are not precisely equivalent. See the appropriate asset class article in index returns for historical return comparisons among various indexes. Note that all Fidelity funds are listed with the ticker that will remain active after the asset classes are merged in November 2018. Other tickers can be found in the appendix to the press release announcing the fund changes.
Fund Class Fund Name Ticker ER Index Tracked
US Stocks
Total US Stock Market Vanguard Total Stock Market Index Fund VTSAX 0.04% CRSP Total Market Index
Fidelity Total Market Index Fund FSKAX 0.015% Dow Jones US Total Stock Market Index
Fidelity ZERO Total Market Index Fund FZROX 0.00% Fidelity U.S. Total Investable Market Index
iShares Core S&P Total U.S. Stock Market ETF ITOT 0.03% S&P Total Market Index
S&P 500 Vanguard 500 Index Fund VFIAX 0.04% S&P 500
Fidelity 500 Index Fund FXAIX 0.015%
iShares Core S&P 500 ETF IVV 0.04%
Extended Market Vanguard Extended Market Index Fund VEXAX 0.08% S&P Completion Index
Fidelity Extended Market Index Fund FSMAX 0.045% Dow Jones U.S. Completion Total Stock Market Index [3]
Mid Cap Vanguard Mid Cap Index Fund VIMAX 0.05% CRSP US Mid Cap Index
Fidelity Mid Cap Index Fund FSMDX 0.025% Russell Mid Cap Index
iShares Core S&P Mid-Cap ETF IJH 0.07% S&P MidCap 400 Index
Small Cap Vanguard Small Cap Index Fund VSMAX 0.05% CRSP US Small Cap Index Index [4]
Fidelity Small Cap Index Fund FSSNX 0.025% Russell 2000 Index
iShares Core S&P Small-Cap ETF IJR 0.07% S&P SmallCap 600 Index
Real Estate Vanguard Real Estate Index Fund VGSLX 0.12% MSCI US Investable Market Real Estate 25/50 Index
Fidelity Real Estate Index Fund FSRNX 0.07% Dow Jones U.S. Select Real Estate Securities Index
Fidelity MSCI Real Estate Index ETF FREL 0.084% MSCI USA IMI Real Estate Index
iShares Core U.S. REIT ETF USRT 0.08% FTSE NAREIT Equity REITS Index
International Stocks
Total International Stock Market Vanguard Total International Stock Index VTIAX 0.11% FTSE Global All Cap ex US Index
Fidelity Total International Index Fund FTIHX 0.06% MSCI ACWI ex USA IMI Index
Fidelity ZERO International Index Fund FZILX 0.00% Fidelity Global ex US Index (excludes small caps)
iShares Core MSCI Total International Stock ETF IXUS 0.10% MSCI ACWI ex USA IMI Index
Developed Markets [note 1] Vanguard Developed Markets Index Fund VTMGX 0.07% FTSE Developed All Cap ex US Index
Fidelity International Index Fund FSPSX 0.045% MSCI EAFE Index (excludes small caps)
iShares Core MSCI International Developed Markets ETF IDEV 0.05% MSCI WORLD ex USA IMI Index
iShares Core MSCI EAFE IEFA 0.08% MSCI EAFE IMI Index
Emerging Markets Vanguard Emerging Markets Index Fund VEMAX 0.14% FTSE Emerging Markets All Cap China A Inclusion Index
Fidelity Emerging Markets Index Fund FPADX 0.08% MSCI Emerging Markets Index (excludes small caps)
iShares Core MSCI Emerging Markets IEMG 0.14% MSCI Emerging Markets IMI Index
US Bonds
Short-Term Treasury Vanguard Short-Term Treasury Index Fund VSBSX 0.07% Bloomberg Barclays US Treasury 1–3 Year Bond Index
Fidelity Short-Term Treasury Bond Index Fund FUMBX 0.03% Bloomberg Barclays 1-5 Year U.S. Treasury Index
iShares 1-3 Year Treasury Bond ETF SHY 0.15% ICE U.S. Treasury 1-3 Year Bond Index
Intermediate-Term Treasury Vanguard Intermediate-Term Treasury Index Fund VSIGX 0.07% Bloomberg Barclays US Treasury 3–10 Year Bond Index
Fidelity Intermediate Treasury Bond Index Fund FUAMX 0.03% Bloomberg Barclays 5-10 Year U.S. Treasury Bond Index
iShares 3-7 Year Treasury Bond ETF IEI 0.15% ICE U.S. Treasury 3-7 Year Bond Index
iShares 7-10 Year Treasury Bond ETF IEF 0.15% ICE U.S. Treasury 7-10 Year Bond Index
TIPS Vanguard Inflation Protected Securities Fund VAIPX 0.10% [note 2] Not an index fund
Fidelity Inflation-Protected Bond Index Fund FIPDX 0.05% Bloomberg Barclays U.S. TIPS Index
iShares TIPS Bond ETF TIP 0.20% Bloomberg Barclays U.S. TIPS Index
Long-Term Treasury Vanguard Long-Term Treasury Index Fund VLGSX 0.07% Bloomberg Barclays US Long Treasury Bond Index
Fidelity Long-Term Treasury Bond Index Fund FNBGX 0.03% Bloomberg Barclays U.S. Long Treasury Index
iShares 20+ Year Treasury Bond ETF TLT 0.15% ICE U.S. Treasury 20+ Year Bond Index
Aggregate Bond Vanguard Total Bond Market Index Fund VBTLX 0.05% Bloomberg Barclays U.S. Aggregate Float Adjusted Index
Fidelity U.S. Bond Index Fund FXNAX 0.025% Bloomberg Barclays U.S. Aggregate Bond Index
iShares Core U.S. Aggregate Bond ETF AGG 0.05% Bloomberg Barclays US Aggregate Bond Index
International Bonds
ex-US Aggregate Bond Vanguard Total International Bond Index Fund VTABX 0.11% Bloomberg Barclays Global Aggregate ex-USD Float-Adjusted Index (Hedged)
No Fidelity mutual fund available for this asset class
iShares Core International Aggregate Bond ETF IAGG 0.09% Bloomberg Barclays Global Aggregate ex USD 10% Issuer Capped (Hedged) Index
Balanced Funds
Target-date funds Vanguard Target Retirement Funds Various 0.13% - 0.15%
Fidelity Freedom® Index Funds Various 0.14%
Fixed allocation funds Vanguard LifeStrategy VASIX, VSCGX, VSMGX, VASGX 0.11% - 0.14% 20/80 to 80/20 allocations
Fidelity Four-in-One Index Fund FFNOX 0.11% 85/15 index fund
iShares Core Allocation ETFs AOK, AOM, AOR, AOA 0.25% 30/70 to 80/20 allocations
  • The transaction fees to buy Vanguard mutual funds at Fidelity are quite high --$75 for the first purchase, but subsequent purchases can be $5 per purchase if you set up an automatic investment plan. Admiral Class shares are not available for purchase at Fidelity. Vanguard has ETF equivalents for most of its index funds. Like other stocks and ETFs, Vanguard ETFs can be bought and sold at Fidelity for $4.95--but check Fidelity for current fee details. If you want to use actual Vanguard products, using Vanguard ETFs is probably the cheapest way to do so at Fidelity.
  • 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.

Fidelity tips, links, and general orientation

The default account at Fidelity is a full-featured brokerage account. You can buy mutual funds (Fidelity and non-Fidelity funds), ETFs, individual stocks, bonds, brokered CDs, along with options and precious metals, all within the same Fidelity account. As of April 2015:

  • Fund Picks From Fidelity® screens selections for funds Fidelity wants you to know about. The funds meet certain selection criteria, such as no transaction fees (see website for details) or having a high historical risk-adjusted return.

Notes

  1. FTSE classifies Korea as a developed market, while MSCI classifies it as emerging. Canada is not included in EAFE indexes.
  2. Admiral Shares class fund has a $50,000 minimum investment. Investor-class fund VIPSX has a 0.20% ER and a $3,000 minimum

See also

References

  1. Vanguard's major competitors in Exchange Traded Funds are Blackrock ishares and State Street.
  2. Bogleheads® forum topic: Fidelity Files for two Fidelity ZERO℠ Funds (0.00% ER total stock and total international mutual funds), jhfenton. Aug 01, 2018
  3. See, Dow Jones US Total Stock Market Indexes Literature.
  4. Vanguard also offers the Vanguard Russell 2000 ETF.