Considering that the financial media has spent more than a decade lauding the benefits of low-cost index funds versus funds with higher fees, Fidelity didn’t just raise the bar — it may have changed the game. Let’s take a closer look at what Fidelity is offering in these two new funds and how they stack up.
First off, these are truly no-fee investment products, and they are designed to provide retail investors the lowest possible cost access to attain returns similar to the U.S. stock market with the Fidelity ZERO Total Market Index Fund and to international stocks with the Fidelity ZERO International Fund. These funds have zero expense ratio, have no expenses for marketing, and when you buy directly from Fidelity, have no transaction fees.
That’s as low-cost as an investment gets. One of the ways Fidelity is able to offer a zero-fee fund is by creating its own indexes to track and not licensing a well-known index like the S&P 500.
In the case of the Total Market Index Fund, the company has developed the Fidelity U.S. Total Investable Market Index, “which is a float-adjusted market capitalization-weighted index designed to reflect the performance of the U.S. equity market, including large-, mid- and small-capitalization stocks.” The International Fund will track the Fidelity Global ex U.S. Index, also a proprietary Fidelity index described as “a float-adjusted market capitalization-weighted index designed to reflect the performance of non-U.S. large- and mid-cap stocks.” Read more from journaltimes.com…
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