Fidelity Investments is cutting fees again, this time to zero.
In a revised filing with the Securities and Exchange Commission, the firm is registering a Flex International Index Fund to track foreign stocks that will be available free to selected investors “in certain fee-based accounts.” The filing explains that “managed account clients, retirement plans, plan sponsors and/or plan participants pay a wrap fee that covers investment advisory and administrative services.”
The fund expects to get paid by lending securities to institutional investors.
It will invest at least 80% of assets in securities included in the MSCI All Country World Index, excluding those in the USA Index and in depository receipts representing securities included in the index, according to the SEC filing.
In addition to the no-fee fund filing, Fidelity has reduced fees on three actively managed bond ETFs from 45 basis points to 36 basis point, effective April 1. They are the Fidelity Corporate Bond ETF (FCOR), Fidelity Limited Term Bond ETF (FLTB) and Fidelity Total Bond ETF (FBND). All three ETFs were launched in October 2014 as Fidelity’s first actively managed ETFs.
These fee cuts, first reported by Citywire, were confirmed by a Fidelity spokeswoman. She told ThinkAdvisor that the cuts mean these ETFs are now even more competitively priced than they had been. Fidelity, like other asset managers, is responding to the fee compression that is spreading throughout the industry for both active and passive funds.
In July Fidelity announced it was cutting fees on 14 of 20 index mutual funds, including four bond funds: Fidelity US Bond Index, Fidelity Short-Term Treasury Bond Index, Fidelity Intermediate Treasury Bond Index and Fidelity Long-Term Treasury Bond Index, claiming it would make some index funds even cheaper than Vanguard’s.