How Fidelity’s No-Fee Mutual Funds Could Revolutionize Investing

Photo by ImageFlow / Shutterstock.com

Fidelity Investments is now offering what it characterizes as the industry’s first mutual funds with a zero percent expense ratio — a move that promises to revolutionize investing.

“This means investors will pay a 0.00% fee, regardless of how much they invest in either fund,” the firm announced this week.

The two new funds — which are also available with no minimum investment — are available to investors starting today. Their names are:

  • Fidelity ZERO Total Market Index Fund
  • Fidelity ZERO International Index Fund

This news is a huge deal for the average person trying to save money for retirement, as index funds are widely considered among the shrewdest ways to invest retirement savings.

This move is also a jab at Fidelity’s index fund competitors like Vanguard Group and Charles Schwab. Indeed, Fidelity’s announcement comes one month after Vanguard announced that it would debut commission-free exchange traded funds (ETFs) in August.

Vanguard made a name for itself by offering index funds with some of the lowest expense ratios. But Fidelity has been one-upping Vanguard by slashing costs for at least a couple of years now.

No minimum investments

It’s not just the two new index funds that are available with no required minimum investment.

Fidelity has also implemented “across-the-board zero investment minimums” for its brokerage accounts. In other words, it will require no minimum investment from folks seeking to open a brokerage account.

Additionally, Fidelity now requires no minimum investment for its mutual funds and 529 college savings plans that are available to individual investors, either directly or via a financial adviser.

Lower fees

In addition to debuting fee-free index funds, Fidelity is reducing fees “on its existing stock and bond index mutual funds.” The average asset-weighted annual expense ratio for these investments will fall by 35 percent.

Jabbing directly at competitors, Fidelity continues:

“With this action, 100 percent of Fidelity’s stock and bond index mutual funds and sector ETFs will have total net expenses lower than all of Vanguard’s comparable funds that are available to individuals, advisors and institutional investors. In addition, Fidelity beats Schwab’s prices for nine of 10 comparable index mutual funds (and is tied on the 10th index mutual fund).”

Fidelity estimates the changes will save shareholders a total of $47 million annually.

Fidelity also has eliminated account fees and money movement fees for brokerage accounts. This means it will not charge individual investors for:

  • Domestic bank wires
  • Check stop payments
  • Returned checks
  • Low-balance maintenance

What’s your take on this news? Sound off below or over on our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
9 Free Things That Used to Cost Us Money
9 Free Things That Used to Cost Us Money

Not everything is getting more expensive.

7 Unexpected Perks of Downsizing as a Retiree
7 Unexpected Perks of Downsizing as a Retiree

Downsizing your home offers many benefits, including some you may not have anticipated.

10 Bad Money Habits That Are Robbing You Blind
10 Bad Money Habits That Are Robbing You Blind

Here’s how to change those bad behaviors.

60% of People With This Disease Don’t Know They Have It
60% of People With This Disease Don’t Know They Have It

Millions of people overlook this potentially potent condition that tends to strike women and older adults.

8 Retailers That Offer Free Prescription Drug Delivery
8 Retailers That Offer Free Prescription Drug Delivery

You won’t have to leave the safety of home to get prescriptions if you use these pharmacies.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

Over 50? The CDC Says You Need These 4 Vaccines
Over 50? The CDC Says You Need These 4 Vaccines

Fall is the time to schedule vaccines that can keep you healthy — and even save your life.

11 Senior Discounts for Anyone Age 55 or Older
11 Senior Discounts for Anyone Age 55 or Older

There is no need to wait until you’re 65 to take advantage of so-called “senior” discounts.

11 Household Items That Go Bad — or Become Dangerous
11 Household Items That Go Bad — or Become Dangerous

When you get the impulse to stockpile these everyday items, pay close attention to their expiration dates.

8 Things You Can Get for Free at Pharmacies
8 Things You Can Get for Free at Pharmacies

In this age of higher-priced drugs and complex health care systems, a trip to the pharmacy can spark worry. Freebies sure do help.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

The 10 Most Commonly Stolen Vehicles in America
The 10 Most Commonly Stolen Vehicles in America

A new model parks atop the list of vehicles that thieves love to pilfer.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

10 Reasons Why You Should Actually Retire at 62
10 Reasons Why You Should Actually Retire at 62

If you can, here are several good reasons to retire earlier than we’re told to.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

26 States That Do Not Tax Social Security Income
26 States That Do Not Tax Social Security Income

These states won’t tax any of your Social Security income — and in some cases, other types of retirement income.

14 Things That Are ‘Free’ With Medicare
14 Things That Are ‘Free’ With Medicare

These services could save you money and help prevent costly health problems.

5 Keys to Making Your Car Last for 200,000 Miles
5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

5 Things That Make Life More Meaningful for Retirees
5 Things That Make Life More Meaningful for Retirees

Retirees agree: These are the things that give them purpose and fulfillment in their golden years.

15 Amazon Purchases That We Are Loving Right Now
15 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

10 Things You Should Never Do With Bleach
10 Things You Should Never Do With Bleach

Does the pandemic have you reaching for bleach more than ever before? Learn the ins and outs of using this powerful disinfectant.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.