Buzz
A race we can support: Fidelity has unveiled two fee-free index funds, outpacing Vanguard and Schwab as the first fund provider to offer such an option.
The Fidelity Zero Total Market Index Fund and the Fidelity Zero International Index Fund charge no fees—0.00 percent—regardless of the investment amount. Available on Friday, these funds allow investors to tap into both U.S. and global markets without any cost.
Fund companies and discount brokers have been in an ongoing 'fee battle,' as reported by CNBC, a positive development for everyday investors. Vanguard announced in July that it would eliminate trading fees for ETFs starting this month. However, Fidelity’s new move could give it a competitive advantage.
As investors grow more conscious of the fees they’re paying (and become increasingly reluctant to choose pricey products), CNBC observes:
Many experts in index funds and ETFs have suggested that offering the basic market exposures for free makes sense for fund managers, with fees applied to more specialized products as individuals and advisors fill out their portfolios.
Fidelity will also reduce fees on several 'core' mutual funds by about 35 percent and remove minimum investment requirements on some funds. The company claims its fees will be lower than those of Schwab and Vanguard.
As we’ve mentioned before, fees are one of the key factors to consider when choosing your investments, as they can erode your returns. Investing in low-cost ETFs and index funds is the best way for most of us to build wealth over time. So Fidelity’s announcement is definitely a win—let’s see if other fund companies follow suit.
