Fidelity cutting fees at 8 index mutual funds

Published on NewsOK Modified: December 11, 2012 at 3:30 pm •  Published: December 11, 2012
Advertisement
;

The moves are aimed at "providing workplace retirement plan sponsors and individual investors access to a wide-array of high-quality index funds at some of the most competitive pricing in the industry," said JS Wynant, an executive vice president at Fidelity.

The other Spartan funds where fees are being cut at some or all of the share classes are Total Market Index; Emerging Markets Index; Global ex-U.S. Index; Mid-Cap Index; Real Estate Index; and U.S. Bond Index.

The funds where investment minimums are being reduced include all eight of those Spartan funds, as well as six other Spartan funds: Extended Markets Index; International Index; Inflation-Protected Index; Intermediate Treasury Index; Long-Term Treasury Index; and Short-Term Treasury Index.

Eight other funds with new investment minimums don't carry the Spartan name: Four-in-One Index; Nasdaq Composite Index; International Enhanced Index; Large Cap Core Enhanced Index; Large Cap Growth Enhanced Index; Large Cap Value Enhanced Index; Mid Cap Enhanced Index; and Small Cap Enhanced Index.

For existing shareholders in Spartan funds, Fidelity next month will automatically convert qualifying Investor Class shares into the lower-cost Advantage shares of the same fund.

Investors have become more cost-conscious in recent years, showing a preference for index mutual funds, as well as index-oriented ETFs. Investors deposited a net $246 billion into index funds and other index products investing in stocks from 2008 through September 2012, according to Morningstar Inc. During that period, withdrawals exceeded deposits in managed stock funds and products, with net withdrawals of nearly $700 billion.

That trend has been a major impetus for recent fee-cutting moves by Vanguard, BlackRock, Schwab and others. Many of the cuts have come at ETFs. While index mutual funds have long been the first choice for anyone looking to invest on the cheap, they're now being undercut by the lowest-cost ETFs. For example, the lowest-cost stock ETF from Schwab now charges 0.04 percent.

A distinct feature is that ETFs can be traded throughout the day like stocks, unlike mutual funds that are priced only at the close of daily trading. Also, with ETFs, average investors pay the same expenses as institutional investors, unlike with mutual funds.