Fidelity zero cost funds

audreyh1 said:
My understanding is that when you loan a security, dividends are no longer qualified. (The person shorting has to pay back the dividends to the loaner - but that is not treated as qualified dividends).
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Yes, at least that is the way it used to be. I had some securities years ago at Ameritrade which must have been lent out. Since the "payment in lieu" I received (of the dividend) was not qualified, Ameritrade then paid me additional $ (assuming I was at the highest rate) to make up for the additional taxes.

It has been quite a while since this happened, but I could look through old 1099's from them to be more specific if needed.

ETA: Found the actual wording (at least for Ameritrade) in terms of their Margin account, see page 14: https://www.tdameritrade.com/retail-en_us/resources/pdf/AMTD086.pdf (The document is copy protected and does not allow copy and I am too lazy to process it to remove the copy protection.0

 
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I just received this email (I'm sure all other Fidelity clients got it, too).

omni
 

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No e-mail. The new funds are both managed by Geode. Left my monthly buy today in the premium classes of the TM and S&P 500 funds. Going to be an interesting day as people start moving money.

ETA: E-mail just came.
 
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DFW_M5 said:
Shareholders?? Fidelity is privately owned.
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So? The owners are shareholders. Publicly traded or private, all owners of a corporation are shareholders.
 
So, I have a similar question as others have asked, but not sure if there is more clarity now that the funds are actually live?

I currently have FSTVX (total stock market premium class) in a Roth IRA account with a fee of .015%. What could the potential downside be to sell all the FSTVX and buy the new zero fee total market fund?

As someone said earlier... it's not as if it's going to save a bunch of money and I don't see how saving a few $$ is going to convince someone to move a large portfolio, but since I'm already with Fidelity and hold this in a Roth IRA it's a pretty easy way to save a few $$ every year unless there's some sort of "gotcha" that I'm missing.

I'd appreciate any insight or thoughts that anybody has.
 
SkinsFan0521 said:
... I currently have FSTVX (total stock market premium class) in a Roth IRA account with a fee of .015%. What could the potential downside be to sell all the FSTVX and buy the new zero fee total market fund? ...
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Probably none. We have FSTVX, too, and I just checked Morningstar. Current fee is listed at 0.04%. So is the switch worth it to save 4bps? $40/year on a hundred K $? Your call.

In our case we hold the FSTVX at Schwab. I'll be very surprised if Fido allows those zero funds to be available through other brokers.
 
SkinsFan0521 said:
So, I have a similar question as others have asked, but not sure if there is more clarity now that the funds are actually live?

I currently have FSTVX (total stock market premium class) in a Roth IRA account with a fee of .015%. What could the potential downside be to sell all the FSTVX and buy the new zero fee total market fund?

As someone said earlier... it's not as if it's going to save a bunch of money and I don't see how saving a few $$ is going to convince someone to move a large portfolio, but since I'm already with Fidelity and hold this in a Roth IRA it's a pretty easy way to save a few $$ every year unless there's some sort of "gotcha" that I'm missing.

I'd appreciate any insight or thoughts that anybody has.
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Someone over on M* pulled this out of the prospectus:

Sub-Adviser - Geode. Each fund and FMRC have entered into sub-advisory agreements with Geode. Pursuant to the sub-advisory agreements, FMRC has granted Geode investment management authority as well as the authority to buy and sell securities.

Under the terms of the sub-advisory agreements, for providing investment management services to Fidelity ZERO℠ International Index Fund and Fidelity ZERO℠ Total Market Index Fund, FMRC, and not the fund, pays Geode fees at an annual rate of 0.0525% and 0.0125%, respectively, of the average net assets of the fund."

So Fidelity (through FMRC) are compensating their subadvisor directly, rather than through the fund assets.

Personally, I’m sticking with my Premium Index funds. 0.015% is teeny. I’m not interested in the cap gains hit (although technically substantially identical I’d need the brokers cooperation to make it a non-taxable event). I’d also like to see things settle down. In the meantime I’ll really enjoy these lowered expense ratios.
 
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Zero, Zilch, Nada!

ETA: Well, I’m late to this party but, got some Mod help to merge this post, after my search didn’t find the existing thread. But, I thought the screen shots & link would still be helpful>>>

I received an email notice early this morning. Seems to be a major move (even though fees are already very low) to gain more business; and much of it from Vanguard.

I don’t see any history for the new ZERO Fee funds yet, since their inception date is 8/2/2018. There is also not any ‘composition’ info yet. So, I plan to watch these new funds for more info, then decide whether to act. BTW, no fund transfer/change fees either. Here’s a link and some screen shots.

https://www.fidelity.com/about-fide...nparalleled-value-and-simplicity-to-investors
 

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Good timing, I'm scheduled for a meeting with my Fidelity rep in about two hours. Thanks for the info. I've wanted to talk to her about moving my money into index funds, to reduce the management fees. I wasn't aware of these changes.
 
I picked up some FZROX (Fidelity ZERO Total Market Index Fund) on Saturday with some cash sitting in 2 accounts. Transaction posted today. we'll see.
 
I don't know if there's a lot to crow over on this. I'm in funds, such as IVV that has a 0.04% expense ratio. If comparable "free" index performs just marginally less than that small amount I'm at a loss. No history so can't track how the Fido fund runs compared to other fund performance.
 
35nothing said:
This innovation was long overdue and eventually needs to happen to the financial industry right??

However if the product is free, then you are the product. ( Like google or facebook).
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Yes but. What don't they already have access to about me? Think about your accounts and the information required to legally open an account. They know everything about you, me, everyone that utilizes their systems. I'm not sure how they monetize what they already have, or how they get anything they don't already have because of this enhancement.
 
MRG said:
Yes but. What don't they already have access to about me? Think about your accounts and the information required to legally open an account. They know everything about you, me, everyone that utilizes their systems. I'm not sure how they monetize what they already have, or how they get anything they don't already have because of this enhancement.
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Right - they aren't selling advertising. Big difference.

It's understood that we are a customer of the Fidelity Brokerage. Some of the services they offer me are free. It's clear they are making money off of other services some of which I pay for.
 
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I visited my FA a couple hours ago, who invests my money through Fidelity. I told her I want to manage my own money. I told her I know enough now to do it myself. I said I believe in index funds rather than the managed approach. I was paying around 1.0% on average for the funds, plus her 0.25% fee. Those aren't huge fees, but knocking them down to near-zero would save me about 100K over 20 years, which isn't anything to sneeze at (and that's an underestimate, because it doesn't count increases in the value of that money over the 20 years).

I'm not sure if I'll go for the zero-cost funds or the normal index funds. The expense ratios on the latter seem very low. And as others have pointed out, there isn't any track record.

Anyhow, thank you for the thread. It triggered my decision to pull my money out of the advisor funds and take it into my own hands.
 
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ER Eddie said:
I visited my FA a couple hours ago, and I told her I want to manage my own money. I told her I know enough now to do it myself, and that I believe in index funds rather than a standard, FA-managed approach. I was paying an average of around 0.75 to to 1.0% in expense ratios, plus her 0.25% fee. Those aren't huge fees, but knocking them down to near-zero would save me about 100K over 20 years, which isn't anything to sneeze at (and that's an underestimate, because it doesn't count increases in the value of that money over the 20 years).

I'm not sure if I'll go for the zero-cost funds or the normal index funds. The expense ratios on the latter seem very low.

Anyhow, this thread was the impetus for telling her I was pulling my money out of the advisor funds and taking it into my own hands. I was just planning my routine yearly check-in yesterday, but this thread got me thinking, then deciding.
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What was her response?
 
Let me know what your rep says

Dtail said:
The zero index funds can be found on their site. They advertise for Total Market Index fund and Int'l Index fund.
Now I currently have the existing Int'l fund, so it will be an interesting conversation with my Fidelity rep about the difference and why no advance notification, since I am in the Private Client Group.
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Me too, but my meeting isn't until mid November - let us know what they say!!!:)
 
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