Fidelity Investments, which introduced several no-fee index mutual funds last summer, has fired another shot in the ongoing price war among passively managed funds, once again targeting Vanguard.
It cut expense ratios on the entry level share classes of its target date funds for individual investors, known as Fidelity Freedom Index Funds, to 12 basis points from 14, as of June 1. The fees for 21 out of 22 of these funds are now lower than the fees on comparable Vanguard target date funds, according to Fidelity.
(Related: Fidelity Unleashes No-Fee Index Funds)
Most of Vanguard’s target date funds, investor share class, have expense ratios between 13 and 15 basis points; the Vanguard Target Retirement Income Investor Shares class, however, also charges 12 basis points.
Fidelity says the fee cuts will save current Fidelity Freedom Index Fund shareholders approximately $3.2 million annually, based on fund assets as of April 30.