BOSTON, (Reuters) – Fidelity Investments said on Monday it cut fees on some of mutual funds that track indexes, in another shot that may revive a price war with arch-rival The Vanguard Group, a leader in indexed funds.
For shareholders with less invested in each of the funds, the fees stand at 0.10 percent, Fidelity said.
The permanent reduction — the second in the Spartan funds this year — poses a threat to Vanguard, which has long sold itself as the pioneer of indexing that runs its funds at cost. Vanguard has an Admiral share class for its Vanguard Index 500 Fund, which has an expense ratio of 0.09 percent.
Fidelity’s cut could also be a threat to many exchange- traded funds, which have recently attracted robust interest from investors, because the open-ended funds do not charge a broker fee, said Daniel Wiener, editor of the Independent Adviser for Vanguard Investors.
"Frankly, this is a shot at Vanguard and the entire ETF market," Wiener said. "Performance is comparable (at Vanguard and Fidelity) and with new money going to index funds, those new funds should flow to Fidelity because it offers the lowest cost."
John Sweeney, senior vice president for fund products at Fidelity, said in an interview that the fee cut makes Fidelity "very competitive against ETFs for long-term investors."
PRICE WAR
Earlier this year, the Boston-based financial behemoth made permanent fees of 0.10 percent in four Spartan index funds, which had been voluntarily capped at that level a few months before.
In April, Vanguard, which criticized Fidelity’s waivers as a marketing ploy, retorted by extending its lowest-cost share class to more shareholders.
Benefiting from Fidelity’s latest fee reductions are the Spartan 500 Index Fund, Spartan U.S. Equity Index Fund, Spartan Total Market Index Fund and Spartan Extended Market Index Fund.
The company has also voluntarily capped fees at the Spartan International Index Fund at 0.07 percent for investors with more than $100,000 in assets and 0.10 percent for others. Fees in the funds are contractually bound, respectively, at 17 basis points and 20 basis points for both investors classes.
While he could not put a time frame on how long the waivers would be applied on that fund, Fidelity spokesman John Brockelman said the company "expects this to be for the long- term."
A Vanguard representative was not immediately available to comment.
Fidelity’s fee reduction came as part of an almost two- year-old effort to cut expense ratios, which has spanned from the index fund business to bonds and retail brokerage services.
As of Aug. 31, Fidelity had $1.1 trillion in assets under management.
Fonte: Reuters
