The Wealthy Accountant Forum

General Category => Index Funds and the Stock Market => Topic started by: Maccountant on August 18, 2018, 03:01:47 PM

Title: Fidelity's new FZROX? 0% expense ratio
Post by: Maccountant on August 18, 2018, 03:01:47 PM
Has anyone researched this this new index fund offered by Fidelity? With a zero percent management fee, you have to wonder how they are making a profit? Granted Vanguard's VTSAX was 0.04% which is pretty close to zero. But at least Vanguard in charging something.

It just makes me wonder what am I missing? Where's the catch?

Does anyone have any plans on investing in the fund?

Title: Re: Fidelity's new FZROX? 0% expense ratio
Post by: KeithTax on August 29, 2018, 10:35:50 PM
Maccountant, I read an article where Vanguard and Fidelity have almost no cost in running their index funds. By charging no management fee they hope to bring in more investors and sell them other services: 401(k), advisory services, et cetera.
Title: Re: Fidelity's new FZROX? 0% expense ratio
Post by: Jim on October 22, 2018, 05:57:58 AM
Maccountant, I have no idea how Fidelity will be making money on their zero percent management fee index funds.  I assume with Keith that they will be considered their "loss leader" to get new investors in the door and then overtime up-sell them to advisory services or higher expense products.

As for any plans on investing in the fund.  I won't be investing in them.  Not because I don't believe them, but because of simplicity.  My employer offers Vanguard funds and I invest all of my money at Vanguard.  To move over with my modest portfolio to save 0.04% seems more hassle than it is currently worth.  I may re-evaluate once i get to a $1m portfolio or something along those lines, but that will be several years down the road.  Right now I need to keep saving and letting the market do it's long term thing.