Fidelity Investments has upped the ante in the ongoing fund price war by planning to launch 13 funds that charge no fees, according to regulatory filings.
The Fidelity Flex funds, for which the firm first filed for last year, have expense ratios of zero. But the big caveat is that they will only be available in certain fee-based managed accounts offered by Fidelity.
An example of such fee-based accounts is Fidelity’s robo-advisor Fidelity Go, which will offer mostly passive Flex funds, according to a Fidelity spokesman.
‘Customers will benefit through a reduction and simplification of the all-in fee for Fidelity Go taxable accounts, while maintaining a same level of diversification opportunities found in existing Fidelity Go portfolio options,’ said the same spokesman.
Fidelity recently disclosed in a wealth advisory fee overhaul that starting April 13, Fidelity Go clients will pay an annual advisory fee of 0.35% instead of paying both management fees and underlying fund fees.
The Flex fund line-up includes:
- Fidelity Flex Large Cap Growth fund
- Fidelity Flex Intrinsic Opportunities fund
- Fidelity Flex Core Bond fund
- Fidelity Flex Mid Cap Value fund
- Fidelity Flex Opportunistic Insights fund
- Fidelity Flex Small Cap Index fund
- Fidelity Flex Inflation-Protected Bond Index fund
- Fidelity Flex International Index fund
- Fidelity Flex Real Estate fund
- Fidelity Flex Small Cap fund
- Fidelity Flex Short-Term Bond fund
- Fidelity Flex International fund
- Fidelity Flex Government Money Market fund
These funds will be managed by a team of five portfolio managers consisting of Deane Gyllenhaal, Patrick Waddell, Louis Bottari, Peter Matthew and Thomas Brussard.
Fidelity also recently reduced fees on three actively managed bond ETFs, the Fidelity Corporate Bond ETF (FCOR), Fidelity Limited Term Bond ETF (FLTB) and Fidelity Total Bond ETF (FBND) from 0.45% to 0.36%.
Some professional investors remain skeptical over the 'no-fee' label. Meb Faber, chief investment officer at Cambria Investment Management said tweeed:
Brilliant idea if an ETF at 0%...in mutual fund where they're paying fees already it's just shuffling chairs around..— Meb Faber (@MebFaber) April 11, 2018
"will be available free to selected investors “in certain fee-based accounts.”" https://t.co/uZAIggRlAY