It's All About the Fees, Fidelity
If you want to compete with Vanguard -- and get ahead of smart beta -- you have to compete on cost.
This article is for subscribers only.
Fidelity announced its less-than-groundbreaking entry into the booming world of smart beta in April with the launch of a large-cap, value ETF. Now the mutual fund giant is back in the news with another me-too move: It recently cut prices on 27 passive index funds in order to beat or match the already low, low fees that its largest competitor, Vanguard, charges for similar funds.
Jim Lowell, editor of the Fidelity Investor newsletter and website, called the move “hugely significant” -- but perhaps that’s a slight exaggeration. The Fidelity Small Cap Index Fund, for example, cut fees from 0.23 percent to 0.19 percent, and the Fidelity 500 Index Fund cut fees -- wait for it -- from 0.095 percent to 0.09 percent.