First investments with Fidelity

[statsman]

My DW's 401(k) is moving to Fidelity, a move being made company-wide. She currently has about 2/3rd in DODIX (Dodge and Cox Income) and 1/3rd in VFIJX (Vanguard GNMA) with the prior investment firm.

While the move will initially invest in these assets at their current amounts, I would prefer to get her into some Fidelity index funds, which she has access to pretty much all of them, it appears. In addition, she doesn't wish to be invested in a separate GNMA fund, especially at this percentage.

I know little about Fidelity. Any suggestions for some Fidelity index funds, particularly a total market bond fund? FTBFX was suggestion by the Fidelity rep a few weeks ago, but this looks to have a slightly higher expense ratio (0.45%) than DODIX (0.42%).

 

[chassis]

Overall I am a satisfied Fidelity client. I have had accounts over the years with Vanguard and others, and Fidelity is the best. I use their trading platform daily.

 

[Brat]

Back in the day I held DODIX, can't recall why I sold it but it is a quality fund.

Listening today to Jim Cramer now is the time to hold back on buying equities unless one is burning a hole in your pocket.

 

[GoBears]

FTBFX is not an index fund; it is actively managed. The total bond index fund is FXNAX. The index fund’s expense ratio is .025%. Some say active management may better for investing in bonds. I don’t know and therefore default to the lower cost index.

Fidelity’s Total Market Index Fund’s ticker is FSKAX. The expense ratio is .015%. The total international index fund is FTIHX. Expense ratio is .06%.

Fidelity also has several zero expense ratio index funds. You can find them on the Fidelity website. The zero funds are not portable to other brokerages and follow proprietary Fidelity indices, which may or may not matter to you.

 

[njhowie]

I know little about Fidelity. Any suggestions for some Fidelity index funds, particularly a total market bond fund? FTBFX was suggestion by the Fidelity rep a few weeks ago, but this looks to have a slightly higher expense ratio (0.45%) than DODIX (0.42%).

FTBFX is the comparable fund to DODIX. However, a 0.03% difference in expense ratio is not worth wasting the brain power on...that's 30 cents/$1000/year, or $300/million/year. Meanwhile, the difference in annual total return for every time period has DODIX outperforming FTBFX even after expenses. So purely on a total return basis, DODIX is the better choice. More importantly, will DODIX and VFIJX even be offered when the 401k moves over to Fidelity? And if they are, are there any transaction fees associated with buying/selling them? For normal Fidelity customers, DODIX carries a $75/transaction fee, while VFIJX is not even available.

Aside from that, note that FTBFX and DODIX are bond funds, not bond index funds. If you are looking at Fidelity bond index funds, they have a number of them, but in general have lower returns than FTBFX and DODIX.

Fund | 1 Year|3 Years|5 Years|10 Years|Expense
FTBFX |6.98%|5.52%|4.40%|4.2%|0.45%
DODIX |7.44%|5.61%|4.68%|4.24%|0.42%
||||||

Fidelity Bond Index Funds
FXNAX |0.37%|4.66%|3.05%|3.42%|0.025%

FMBIX |3.55%||||0.07%

FUMBX |-0.21%|3.27%|1.86%|1.67%|0.03%

FUAMX |-4.23%|4.78%|2.34%|3.53%|0.03%

FNBGX |-16.54%|5.86%|3.05%|6.27%|0.03%

FNSOX |-1.57%|3.57%|3.05%||0.03%

FBIIX |2.81%||||0.06%

https://www.fidelity.com/mutual-funds/investing-ideas/index-funds

 

[Bamaman]

Your DW might want to get the details on the FIDO 401K offerings. Because they are going with Fidelity doesn't mean that all of Fidelity's financial offerings will be offered by a company's 401K.

My company's 401K offered some of the good mutuals and they offered some of the medium good mutual funds. They didn't offer some of the speculative investments because they didn't want their employees to lose their retirement funds playing the highly speculative funds.

When the details are available, you can go online and see the present and past performance of all investment offerings. Their reporting systems are great.

 

[Done]

The Bogleheads wiki article on Fidelity lists funds (under Tools) and compares expense ratios.

There is also no fee to trade ETFs in a brokerage account or IRA, but the options may be limited in a 401k. AGG, BND and SCHZ are example ETFs for total bond.

 

[The Cosmic Avenger]

I've got most of my accounts split between FXNAX for bonds and FXAIX (S&P index) for stocks. Low expense ratio and good performance on both; I tried some others, and felt like I was paying more in expenses for pretty much the same thing.

 

[statsman]

Thanks for the feedback everyone. I should have stated that any stock investments for us would be in the taxable portion of our assets. Just bond funds (actively managed and index) and TIPS index funds between the two of us within our tax-deferred accounts.

Surprisingly, her DODIX and VFIJX investments moved over to the same with Fidelity. But I left out one, huge detail: DW no longer works with the company. The main reason she still is invested in the 401(k) is because of the availability of DODIX and the ability to trade it fee-free. In the past year, that has changed, in addition to the previous 401(k) investment firm tacking on quarterly management fees that her previous company used to pay for.

Anyway, the question about Fidelity bond investments would apply to an IRA, which is where the 401(k) will be transferred to after this week. We do like DODIX, but now will be faced with transaction fees selling the fund within the Fidelity 401(k) and IRA, once there. I think whatever advantage DODIX might have over FTBFX gets diluted with the DODIX selling fees.

 

[GoBears]

I believe, and you should confirm with Fidelity, that the $75 transaction fee applies only to purchases (excluding reinvestment of dividends) and not sales.

 

[MRG]

I believe, and you should confirm with Fidelity, that the $75 transaction fee applies only to purchases (excluding reinvestment of dividends) and not sales.

+1

 

[statsman]

I believe, and you should confirm with Fidelity, that the $75 transaction fee applies only to purchases (excluding reinvestment of dividends) and not sales.

Hmmm. If the $75 transaction fee applies only to purchases, which is how I read the description, that helps. I wasn't sure about the quarterly dividends that are reinvested with DODIX, but if those aren't subject to a fee, that really helps.

 

[Winemaker]

I have managed DM's 401k since DF passsed in '05. I have had her funds in Fidelity Growth FDGRX, Fidelity Value FDVLX, Fidelity Equity Income FDQIX, Fidelity Large Cap FDLVX, Fidelity MidCap FDMVX, and Fidelity Small Cap FDPVX. She has taken a RMD for the past 15 years, and her account is +265% since.

I managed the same account when it was DF's when he started it back in the '80's, with the same funds. I do not have the performance figures for years prior to 2005.

 

[chassis]

I have managed DM's 401k since DF passsed in '05. I have had her funds in Fidelity Growth FDGRX, Fidelity Value FDVLX, Fidelity Equity Income FDQIX, Fidelity Large Cap FDLVX, Fidelity MidCap FDMVX, and Fidelity Small Cap FDPVX. She has taken a RMD for the past 15 years, and her account is +265% since.

I managed the same account when it was DF's when he started it back in the '80's, with the same funds. I do not have the performance figures for years prior to 2005.

@Winemaker how do you like the performance and holdings of FDGRX? I have held it for a while and like it. However the fund manager Steve Wymer seems about the age where it is reasonable that he retire. Just speculation on my part. What do you think of FDGRX future prospects and about Wymer retiring?

 

[jazz4cash]

I am very impressed with the web and phone support resources at Fido. Have you explored the website? If you search for a particular fund (like Dodge&Cox) it will return a list of similar funds (or you search by drilling down from general to specific attributes). It’s very user friendly if you like to explore and DIY. Also good to prep for a phone, zoom, or in-person meeting.

 

[Winemaker]

According to Fidelity, FDGRX has gone up 936% since October of 2005. I really can't complain.

 

[OldShooter]

... I should have stated that any stock investments for us would be in the taxable portion of our assets. Just bond funds (actively managed and index) and TIPS index funds between the two of us within our tax-deferred accounts. ...

Is the tax tail wagging the investment dog here? Your AA should not be determined by the ratio of the sizes of your taxable and non-taxable acconts IMO. Do you have an AA target that you manage to?

 

[statsman]

Is the tax tail wagging the investment dog here? Your AA should not be determined by the ratio of the sizes of your taxable and non-taxable acconts IMO. Do you have an AA target that you manage to?

We have more in taxable than in tax deferred, so even maxing out fixed income in tax deferred would still require us to have a good amount of fixed income in taxable.

 

[ERObjd]

I just helped 21 yr old daughter set up her Rothh IRA with Fidelity a few months back, she selected FZROX (which is total stock market) It is zero ER and zero minimum to start and no monthly minimum, though wife and I gave her $500 to put into the fund for starters, she works full time and works part time at UPS and attends college part time, she is able to invest $200-$300 per month most months ,but if she has surprise expence such as car repair, dental etc due to car repair, then she invests $50 or $25 into it.. something is better than nothing. She is in 100% FZROX. I use Vanguard Balanced and Wellington funds for my own taxable account and we looked at those but you have to open up with $3K minimum at Vanguard .. so for her Fidelity was the clear choice. She will likely just stay in 100% FZROX at her age and make it a 2 fund by adding FXNAX (fidelity total bond market ) when she gets to about age 35. Not a lot of historical data for these new Fidelity ZERO funds but so far it has done very well for her .. about 17% gains since she has owned the fund.tracks the same as schwab and vangurd's similar mutual funds. Cant go wrong with any of the big 3 IMO Vanguard, Fidelity schwab all have very good funds and the diff between a zero fund and a fund like vanguard with 0.04% or a Schwab fund with 0.025% is quite small.

 

[OldShooter]

I agree totally. No worries about no history on FZROX because there actually is history -- decades of market history. All of the total market funds are about the same. Tracking errors are negligible and income from loaning to shorts is small but welcome. Also agree on all the VG, Fido, Schwab funds being essentially the same. The expense ratio competition has virtually eliminated fund expense ratios for index funds. Re fixed income at 35YO I would suggest that is about 20 years too early for an age 65 retirement, less early for an ER. The main point of having fixed income is defense against SORR, which doesn't emerge as a risk until she begins drawing on her portfolio.