Fidelity's No-Fee Index Funds — Are They Worth it?
Por um escritor misterioso
Last updated 20 março 2025
Fidelity Investments rocked the investment world last August with its bombshell offer of zero-fee index funds. In the race to the management fee bottom, Fidelity changed the game. But, there's more to this move than meets the eye.Source: Shutterstock Fidelity offers three zero management expense ratio funds and many zero minimum investment amount funds. Fidelity's No-Fee Index Fund FactsFidelity ZERO Large Cap Index (NASDAQ:FNILX) targets the returns of the large-cap U.S. equity market. The fund has no minimum investment requirement, unlike competitor Vanguard. The fund does not charge a fund management fee.InvestorPlace - Stock Market News, Stock Advice & Trading TipsFidelity ZERO Total Market Index (NASDAQ:FZROX) seeks to provide returns commensurate with the total U.S. stock market. This fund also has no minimum investment requirement or fund management fees.The third no-management-fee fund is Fidelity ZERO International Index (NASDAQ:FZILX). This fund seeks to replicate the returns of both developed and developing international stocks. As is the case with the other two ZERO funds, this one also has no management fees or investment minimums. Familiar Names in PortfoliosLarge cap-focused FNILX holds names such as Apple (NASDAQ:AAPL), Berkshire Hathaway (NYSE:BRK-B) and Johnson & Johnson (NYSE:JNJ) among the portfolio's top five positions, as of Dec. 31. The 506-stock fund is up 11.94% in 2019, compared to the S&P 500 index's 11.4% gain.In contrast, FZROX holds a much larger range of equities, some 2,500, in its portfolio. The fund's value has increased 12.64% this year. * 7 IPOs to Get Excited for in 2019 FZILX, with its international focus, has a portfolio that's heavy in financial and industrials stocks, with those two sectors making up a combined 32.24% of its 2,295 holdings. The top 10 holdings include HSBC Holdings PLC and Alibaba (NYSE:BABA). Developed markets stocks accounted for about 70% of the portfolio, while emerging markets represented 23% of the holdings. The fund is up 10.15% year to date. How Can Fidelity Afford to Offer Zero Management Fee Funds?It's just common sense that if there's zero management fee, then there's no way to make money. Or is there?Sometimes the goal isn't solely to make money.Fidelity can build a relationship with valuable younger investors, who may ultimately invest in other, more lucrative Fidelity funds and products. Nobel economics laureate Richard Thaler and his co-author Cass Sunstein write in Nudge: Improving Decisions About Health, Wealth, and Happiness about how inertia keeps most people from acting. So, once these young investors are in the Fidelity system, it's likely that they'll remain.Consider these Fidelity No Fee Funds like a loss leader. The grocery offers a discounted item -- such as a gallon of milk -- to get you in the store. Once you're in, it's likely you'll buy other items with higher margins and net a profit for the grocery store. Are Fidelity's Zero-Fee Funds Good Investments?Fees are important, but so is performance. There are a sea of index-mimicking large-cap U.S., total market U.S., and international stock funds. Most benchmark their returns against well-known gauges like the S&P 500.To keep costs down, Fidelity is avoiding the typical licensing fee for a common index fund benchmark. Instead the firm created their own benchmarks -- The Fidelity U.S. Total Investable Market index and others. * 10 Blue-Chip Stocks to Lead the Market But the real question is performance. You can invest in the Vanguard Total Stock Market ETF (NYSEArca:VTI) for 0.04% or 40 cents annually per $1,000 invested. This tiny expense ratio would be worth it if the Vanguard fund outperforms Fidelity's.So, before jumping into these new free index funds, wait until performance information is out. Then if returns are comparable with other low-fee index funds, by all means, go for the Fidelity funds. Consider Tax ConsequencesBefore you jump in with both feet and gobble up these enticing zero-fee index funds, think about the tax consequences. If you need to sell other assets in order to purchase the Fidelity funds, be aware of your cost basis. If you incur taxable gains after selling existing assets to free up capital for the new purchases, it might not be worth it.For example, if you have a specific percentage of your assets in VTI with a 40% gain, then you'll have to pay taxes on that gain in the year that you sell.And, if you sell existing assets for a loss, before deploying the proceeds in a Fidelity zero-fee fund, review the wash sale rules. You must wait 30 days after selling an asset for a loss before buying a similar asset. So, don't sell VTI for a loss and turn around and buy Fidelity ZERO Total Market Index fund, because the loss will likely be denied, and you'll have to add the loss to the cost of the new fund purchase. Fidelity's New Zero-Fee Funds Worth it?It depends. If returns are comparable or better to similar index funds, then sure, buy in. Just remain aware of the tax implications.Today, investment fees have declined so much that it's easy to keep costs down when investing passively in index funds. Even managed accounts like the FidelityGo robo-advisor option allow investors to grow their wealth without forking over huge fund management fees. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Consumer Stocks to Buy and Hold for Years * 4 China Stocks Soaring on Trade Hopes * 3 Esports Stocks to Benefit From the Boom Compare Brokers The post Fidelityas No-Fee Index Funds -- Are They Worth it? appeared first on InvestorPlace.

FSKAX vs VTSAX: Comparing Total Stock Market Index Funds

No minimum investment mutual funds - Fidelity

Fidelity one-ups Vanguard: First company to offer no-fee index fund

Tax Loss Harvesting with Fidelity: A Step by Step Guide

Fidelity ZERO Funds Review - What's the Catch?

Mutual Fund Fees & Expenses for Beginners: Essential Guide 2023

Why These 8%+ Yielding Funds Crush Low-Fee Index Funds (Every Time

Fidelity Just Made Buying an Index Fund Vanguard-Cheap - WSJ

Fidelity ZERO Funds--Are They Worth the Cost? –
Recomendado para você
-
7 Best Fidelity Mutual Funds: Which One Is Right for You?20 março 2025
-
Fidelity's New 401(k) Offering Will Invest in Bitcoin - The New York Times20 março 2025
-
Fidelity Investments commits as the Title Sponsor of The Woodlands Waterway Arts Festival for 2022 - Hello Woodlands20 março 2025
-
Fidelity Investments Review: Weigh the Pros and Cons20 março 2025
-
Fidelity Rewrites the Rules of Investing to Deliver Unparalleled Value and Simplicity to Investors20 março 2025
-
New Full View - Fidelity's Full View just got smarter - Fidelity20 março 2025
-
Fidelity Investments20 março 2025
-
Fidelity chairman says no need for IPO - Bloomberg20 março 2025
-
Fidelity Investments - Association of Corporate Citizenship Professionals20 março 2025
-
About Us, Find Your Fidelity20 março 2025
você pode gostar
-
HOW I GOT A FREE DOMINUS (Roblox)20 março 2025
-
HD wallpaper: Man sitting on a window sill, looking out at night20 março 2025
-
Vegeta Wallpaper 4K, AMOLED, Dragon Ball Super20 março 2025
-
Tokyo Revengers Season 3 Ep1 FHD - BiliBili20 março 2025
-
Sackboy midia fisica20 março 2025
-
Pra quem assistiu Panty & Stocking, isso faz bastante sentido20 março 2025
-
Comentando: Nagi no Asukara #1 – Entre a Terra e o Mar20 março 2025
-
Melhor Smart TV para jogar com PS5 e Xbox Series X20 março 2025
-
Call of Duty Simon Riley Task Force 141 Ghost Fighting Cosplay20 março 2025
-
Trailer de The Eminence in Shadow 2 mostra tema de encerramento20 março 2025