Fidelity Rolls Out Zero-Fee Index Funds

Fidelity Investments rolled out a number of new products and features Wednesday aimed at providing investors with value and flexibility.

What Happened?

Fidelity announced a series of changes and enhancements to its product offerings:

• Zero expense ratio mutual funds.
• No account minimums.
• No account fees.
• No domestic money movement fees.
• No investment minimums on Fidelity retail and advisor mutual funds and 529 plans.
• Reduced pricing on Fidelity index mutual funds.

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Why It’s Important

No other company can match the new offerings, according to Fidelity. 

“The ground-breaking zero expense ratio index funds combined with industry-leading zero minimums for account opening, zero investment minimums, zero account fees, zero domestic money movement fees and significantly reduced index pricing are unmatched by any other financial services company,” Kathleen Murphy, Fidelity's president of personal investing, said in a statement.

Fidelity says its Fidelity ZERO Total Market Index Fund even underprices the 0.14-percent expense ratio of the Vanguard Total Stock Market Index Fund and the 0.03-percent expense ratio of Charles Schwab Corporation SCHW's Schwab Total Stock Market Index Fund. Schwab and Vanguard offer some of the most popular low-cost funds in the market today.

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What’s Next

A booming U.S. economy has created a flood of investment dollars in recent years and financial services companies have been battling it out for their share. Investors should watch to see if the new zero-cost offerings from Fidelity trigger matching moves by other competitors, such as BlackRock, Inc. BLK, Legg Mason Inc LM and T Rowe Price Group Inc. TROW.