Bloomberg News

Fidelity Cuts Fees for Index Funds as Price War Heats Up

December 11, 2012

Fidelity Investments, the second- biggest mutual-fund company, said it will cut fees on index mutual funds as a price war with BlackRock Inc. (BLK:US) and Vanguard Group Inc. heats up.

The firm will make it cheaper to invest in 22 of its funds, including the Spartan series, by cutting fees and lowering the minimum required to invest in the most inexpensive retail share classes, Boston-based Fidelity said today in a statement.

Providers of exchange-traded funds including BlackRock, Vanguard and Charles Schwab Corp. (SCHW:US) have announced cost and fee- cutting measures in the past three months as fund firms fight for clients pouring into passive investment funds. Investors have deposited $306 billion in actively managed mutual funds through October since the beginning of 2010, compared with $536 billion in ETFs and index mutual funds, according to the Investment Company Institute.

“These latest moves are another example of our commitment to 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,” J.S. Wynant, Fidelity’s executive vice president for investment product management and research, said in the statement.

Fidelity’s $48.5 billion Spartan 500 Index Fund (FUSEX:US) is the fifth-largest equity index mutual fund in the U.S. Vanguard runs the remainder of the 10 top funds. Fidelity’s $16.2 billion Spartan U.S. Bond Index Fund is the fourth-biggest U.S. index fixed-income mutual fund. Vanguard offers the top three.

Fidelity manages about $1.6 trillion for investors, including $893 billion in U.S. stock and bond mutual funds, according to research firm Morningstar Inc. (MORN:US) Vanguard is the biggest mutual-fund company, with $2.2 trillion in assets, including $1.5 trillion in U.S. mutual funds.

To contact the reporter on this story: Christopher Condon in Boston at ccondon4@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net


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Companies Mentioned

  • BLK
    (BlackRock Inc)
    • $303.45 USD
    • -1.28
    • -0.42%
  • SCHW
    (Charles Schwab Corp/The)
    • $27.45 USD
    • -0.30
    • -1.09%
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