Comments on: Challenging the Vanguard Faith (or how Fidelity’s ZERO expense funds are increasingly tempting!)

By: Dave

Dave — Sat, 18 Jan 2020 21:02:25 +0000

Has anyone mentioned DIVIDENDS ? Vanguard is distributing them quarterly in vtsax vs only once annually at the end of the year for fzrox. https://www.personalfinanceclub.com/fzrox-vs-vtsax-the-hidden-cost-of-fidelitys-zero-fee-index-funds/

By: JoeHx

JoeHx — Thu, 23 May 2019 19:32:14 +0000

I’ve been calling these zero-fee Fidelity funds “F-ZERO” funds. I think it sounds cooler, and hints at a bit of nostalgia for me, as well.

I currently have my Roth IRA with Vanguard (along with a solo 401k), but my HSA is with Fidelity. I have most of my HSA funds in the domestic F-ZERO fund, with a small amount in cash to pay for more expensive medical stuff (aka upcoming baby). My regular 401k is with Fidelity as well, but the options don’t include any F-ZERO funds.

By: Will

Will — Tue, 21 May 2019 21:49:09 +0000

In reply to My Money Wizard. I don't recall where but I saw a similar analysis at a financial site comparing these two with the same conclusion: including tax, vanguard has the lower cost.

By: J. Money

J. Money — Mon, 20 May 2019 14:02:40 +0000

In reply to Andy. It def. makes me feel better reading all this, haha... Thx ;)

By: J. Money

J. Money — Mon, 20 May 2019 14:01:46 +0000

In reply to Craig. oh wow, that is interesting?! I don't know the answer myself (nor really ever thought about it), but from that article it seems like you're right?

By: Andy

Andy — Sun, 19 May 2019 15:03:35 +0000

https://mutualfunds.com/education/mutual-funds-and-security-lending/

“Mutual fund sponsor Vanguard gives 100% of its fees generated from securities lending back to its shareholders. This is one of the main reasons why Vanguard is able to offer rock-bottom expense ratios. In some cases, fees from securities lending pays for virtually all of the mutual fund’s operating costs.”

Vanguard also has a patent on tax efficiency in it’s mutual funds. The Fidelity zero funds also distribute capital gains with their dividends which creates more taxes in the long run. Vanguard only distributes dividends which results in less taxes owed or even better with mostly qualified dividends.

In my opinion it’s a mirage from Fidelity. I’m sticking with Vanguard. JLCollins would agree with me. His comments at the end of the article.

https://jlcollinsnh.com/2018/09/25/what-we-own-and-why-we-own-it-2018/

By: Craig

Craig — Sat, 18 May 2019 13:37:18 +0000

I’m missing something here, isn’t mutual fund performance reported net of the expense ratio?
https://www.investopedia.com/ask/answers/07/mutual_fund_cost.asp

If so, I think this clears it up for me without any unnecessary math.

By: DB

DB — Sat, 18 May 2019 08:15:18 +0000

I moved to the Fidelity Zero funds the day they opened. No regrets.

By: HariSeldon

HariSeldon — Sat, 18 May 2019 07:46:15 +0000

The real difference between 0.03% and 0% over 60 years is zero.

Your real concerns are how effectively Vanguard and Fidelity manage the running of the index during that period, despite appearances, it’s not that simple.

The job of managing the small details is huge, tracking error is everything and will dwarf .03%.

I looked very carefully at a number of ETFs tracking Canadian stocks, available to European investors, the most expensive provider, iShares was significantly better over a five year period than other providers charging 10 to15 base points less. I’m sure Fidelity will be efficient but Vanguard really have some experience and run a lean machine…

By: Daniel

Daniel — Sat, 18 May 2019 06:25:46 +0000

However it’s worth noting that the patent structure requires the mutual fund to have a ETF share class underneath, and Fidelity doesn’t offer its own ETFs right now. So even when the patent expires, fidelity will have to do some leg work if they want to implement it. No guarantee that they will.