Fidelity Investments on Tuesday dramatically reduced the minimum investments that 401(k)s and other DC plans need to qualify for the low-cost share class of its target-date index mutual fund series.
The Boston-based company, not wanting to be outdone by an identical move in December by its competitor Vanguard, matched its reduction for defined-contribution plans: In both cases, the investment minimums went from $100 million to $5 million.
“With this action, all Fidelity Freedom Index Funds will have total net expenses equal to or lower than comparable Vanguard index target date funds, regardless of investment level,” the announcement from Fidelity read.
The average expense ratio for Vanguard’s Institutional Target Retirement Funds is 9 basis points, while Fidelity charges 8 bps within its series, according to data from the firms.
Today’s investment-minimum reduction applies to Fidelity’s Institutional Premium Class.
Fidelity’s target-date index mutual fund series was 2020’s best seller, with net sales of $15.6 billion, up by 25% over 2019’s sales, according to a recent report from Morningstar.
Vanguard, meanwhile, saw sales down by 92% in its series, at $2.7 billion last year. However, many clients at that firm put money into the collective investment trust version of the series, which overall took in more than $19 billion, according to Vanguard.
The Reddit trading community's formal comment letter against the proposal is drawing widespread attention across finance and tech circles.
RIA aggregator adds $4.8 billion in client assets across seven states as demand grows for alternatives to traditional succession models.
As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management
Shareholder targets FS KKR Capital's directors over alleged portfolio valuation and dividend missteps.
UBS has a history of costly litigation stemming from the sale of volatile investment products.
As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management
Growth may get the headlines, but in my experience, longevity is earned through structure, culture, and discipline
