How to Get the First Fee-Free Index Funds – Info Computing

This is one race to the bottom we can get behind: Fidelity announced it will offer two fee-free index funds, besting Vanguard and Schwab as the first fund company to do so.

The Fidelity Zero Total Market Index Fund and the Fidelity Zero International Index Fund come with a 0.00 percent fee regardless of how much is invested in either fund, and will be available Friday. That gives investors exposure to U.S. and international markets at no cost.

Fund companies and discount brokerages have been engaged in “an ‘endless’ fee war,” according to CNBC, which is good news for the average investor. Vanguard announced in July it will no longer charge trading fees for ETFs, starting this month. But Fidelity’s latest move could give it an edge.

As investors become more aware of the fees they’re paying (and less likely to invest in expensive products), CNBC notes:

Many index fund and ETF experts have argued that it would ultimately make sense for fund managers to offer the “building blocks” — the core market exposures — for free and charge fees for less generic investment products as individuals and advisors fill out their portfolios.

Fidelity will also lower fees on other “core” mutual funds by around 35 percent, and will remove investment minimums to some funds. The fund company says the fees will be lower than Schwab and Vanguard’s offerings.

As we’ve written before, fees are one of the main things to look at when you’re picking your investments, because they can eat away at your returns. And investing in low-cost ETFs and index funds is the best way for the average investor (you and me) to build wealth over time. So Fidelity’s announcement is certainly good news—let’s see if the other fund companies follow suit.