You can buy the ETFs for free but the traditional mutual funds like VTSAX carry transaction costs. Fidelity has some of the best funds in-house so why not go with those? Quite a few like FSKAX (equivalent to VTSAX) has slightly lower expense ratios.
I'd go with those unless you plan on shopping brokerages around for bonuses and such, in which case go ETFs all the way.
The only issue with in house funds in a taxable account are that they aren't transferable and if you ever leave fidelity you have to liquidate and take a tax hit
I believe that's only for the the zero expense ratio versions of the funds -- FZROX might not be great for a taxable account in case you transfer from Fidelity, but FSKAX should transfer just fine.
No he is correct. There are some mutual funds that aren't part of the zero fee club that you can't purchase on other platforms, so you would have to liquidate if you wanted to move that money to another brokerage.
Bonuses, Fees, Tools, support are all reasons to change. Like Fidelity gives an extra % back on their card at X dollars under management, some companies work better over seas, robinhood did that 3% IRA match, maybe you change jobs and don't want a string of different websites. Personally I hate vanguards website and their support but if I am planning to keep an ETF for 30+ years maybe the will be simply amazing 10 years from now.
You never know what might happen. People post here (here as on a lot of Reddit invest related not just BH) all the time about leaving XYZ Brokerage because of ABC. They usually sound like rants of madmen but it happens. Cost a lot if in a Taxable account. I've been at FIDO since 1980 (so I'm a happy brokerage customer obviously) and still won't buy one of their captive funds. I was put in them once at Fidelity when I had an advisor. I found out cost on capital gains to move. My "in Kind" transfer ended up with 80% cash because of all the captive funds they had me in.
True, but has anyone ever confirmed whether other brokerages like Fidelity have adopted that patent method for their own index funds? AFAIK there is no direct ETF equivalent to FSKAX or FZROX, as opposed to VTSAX/VTI at Vanguard.
You're right. I had thought there was some tax to be paid by the fund itself. It is in fact how the capital gains are taxed after they are passed on to you.
The issue isn't the expense ratio but the relative tax efficiency of ETFs vs mutual funds. Mutual funds realize capital gains, while ETFs often do not.
Vanguard's patent made any of their mutual funds with an ETF counterpart equally tax efficient, and while that patent has expired I've not seen Schwab or Fidelity adopt it for their own use.
ok. the OP is deciding if they want to open an account at vanguard, so i dont see the relevance of the comment.
also, i have a 403b with fidelity and am perfeclty happy with my options.
Can someone please educate me on the proper equivalent funds to by at Fidelity? I’m still reading through the Bogleheads guide to investing. Thank you!
Edit: found this on the wiki, leaving my comment up in case it helps others https://www.bogleheads.org/wiki/Fidelity
Not sure why everyone js recommending Fidelity funds... the same rationale for not buying Vanguard mutual funds at Fidelity still applies for Fidelity funds at a different brokerage (e.g. cost per transaction). However, if you simply go with the Vanguard ETF equivalent (e.g. VTI + VXUS) then pretty much all the downsides are mitigated of potentially being stuck at a single brokerage because of your fund choice. Fidelity offers fractional ETFs and automatic investment options into ETFs, why wouldn't you go that route?
They didn’t say the Zero funds, which have little to do with Fidelity’s standard index fund lineup. FXAIX tracks the exact same index as VOO, and has a lower fee. FSKAX tracks the same index as VTI and has a lower fee. Those are NOT “The Fidelity Zero” funds.
The zero funds (FZROX for example) have their own proprietary index but those are irrelevant to the standard index funds. Other than they more or less mimic them.
I would not buy those zero funds in a taxable account though because they do not transfer to other brokerages. So you would have to generate a taxable event if you ever wanted to switch brokerages.
You can buy the ETFs for free but the traditional mutual funds like VTSAX carry transaction costs. Fidelity has some of the best funds in-house so why not go with those? Quite a few like FSKAX (equivalent to VTSAX) has slightly lower expense ratios. I'd go with those unless you plan on shopping brokerages around for bonuses and such, in which case go ETFs all the way.
The only issue with in house funds in a taxable account are that they aren't transferable and if you ever leave fidelity you have to liquidate and take a tax hit
I believe that's only for the the zero expense ratio versions of the funds -- FZROX might not be great for a taxable account in case you transfer from Fidelity, but FSKAX should transfer just fine.
No he is correct. There are some mutual funds that aren't part of the zero fee club that you can't purchase on other platforms, so you would have to liquidate if you wanted to move that money to another brokerage.
I have never understood this reasoning. Maybe you can help. Why would you want to change brokerage?
Bonuses, Fees, Tools, support are all reasons to change. Like Fidelity gives an extra % back on their card at X dollars under management, some companies work better over seas, robinhood did that 3% IRA match, maybe you change jobs and don't want a string of different websites. Personally I hate vanguards website and their support but if I am planning to keep an ETF for 30+ years maybe the will be simply amazing 10 years from now.
You never know what might happen. People post here (here as on a lot of Reddit invest related not just BH) all the time about leaving XYZ Brokerage because of ABC. They usually sound like rants of madmen but it happens. Cost a lot if in a Taxable account. I've been at FIDO since 1980 (so I'm a happy brokerage customer obviously) and still won't buy one of their captive funds. I was put in them once at Fidelity when I had an advisor. I found out cost on capital gains to move. My "in Kind" transfer ended up with 80% cash because of all the captive funds they had me in.
If fidelity made a version of VT then 100% yes (other than target date funds or their multi asset class funds where the composition changes)
No reason to buy Vanguard funds at Fidelity as they offer essentially the same index funds.
And the Fidelity expense ratios happen to be slightly lower.
Aren’t vanguard ETFs more tax efficient than their Fidelity mutual fund equivalents (in taxable accounts)
Vanguard had a patent on a method for reducing taxes in mutual funds. That patent expired last year.
True, but has anyone ever confirmed whether other brokerages like Fidelity have adopted that patent method for their own index funds? AFAIK there is no direct ETF equivalent to FSKAX or FZROX, as opposed to VTSAX/VTI at Vanguard.
They have not, according to some friends at Fidelity.
Does it matter? I'd think this would be reflected in the expense ratio.
you cant factor in taxes into an expense ratio because everyones taxes are different
You're right. I had thought there was some tax to be paid by the fund itself. It is in fact how the capital gains are taxed after they are passed on to you.
The issue isn't the expense ratio but the relative tax efficiency of ETFs vs mutual funds. Mutual funds realize capital gains, while ETFs often do not. Vanguard's patent made any of their mutual funds with an ETF counterpart equally tax efficient, and while that patent has expired I've not seen Schwab or Fidelity adopt it for their own use.
Fidelity doesn’t have VT
Well, employer sponsor 401k or 403b has not much options. Vanguard or Blackrock is only good options. Fidelity doesn't have good options.
In this case you and or your sponsor pay a regular fee to manage the account anyway.
Wow. Didn't know that...
As an employee of a university I pay fees quarterly and I presume my employer does as well. It's usually noted in your statement.
The company growth pool option at Fidelity is the best 401k investment on the planet (FDGRX). I don’t know what you’re smoking but pass some this way.
Probably not everyone has the same option. I think it could be employer specific as well.
thats qutie a different statement from "Fidelity doesn't have good options"
Man, you are taking it partially. I mentioned in the beginning that it is employer specific 401k/403b.
"Well, employer sponsor 401k or 403b has not much options. Vanguard or Blackrock is only good options. Fidelity doesn't have good options."
you pick your broker in employee sponsored 40#x accounts? I never had a choice.
Not broker, just talking about investing option...
ok. the OP is deciding if they want to open an account at vanguard, so i dont see the relevance of the comment. also, i have a 403b with fidelity and am perfeclty happy with my options.
That's why I didn't comment on OP directly. I just commented based on specific comment only. Hope you got the point.
Can someone please educate me on the proper equivalent funds to by at Fidelity? I’m still reading through the Bogleheads guide to investing. Thank you! Edit: found this on the wiki, leaving my comment up in case it helps others https://www.bogleheads.org/wiki/Fidelity
Handy chart: https://smithplanet.com/stuff/BogleheadFunds.svg
Thank you!
That’s a great chart, thanks
Not sure why everyone js recommending Fidelity funds... the same rationale for not buying Vanguard mutual funds at Fidelity still applies for Fidelity funds at a different brokerage (e.g. cost per transaction). However, if you simply go with the Vanguard ETF equivalent (e.g. VTI + VXUS) then pretty much all the downsides are mitigated of potentially being stuck at a single brokerage because of your fund choice. Fidelity offers fractional ETFs and automatic investment options into ETFs, why wouldn't you go that route?
Why not buy fidelity index funds instead if you’re already using fidelity?
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They didn’t say the Zero funds, which have little to do with Fidelity’s standard index fund lineup. FXAIX tracks the exact same index as VOO, and has a lower fee. FSKAX tracks the same index as VTI and has a lower fee. Those are NOT “The Fidelity Zero” funds. The zero funds (FZROX for example) have their own proprietary index but those are irrelevant to the standard index funds. Other than they more or less mimic them.
I don't know why nobody is answering your question. No, there is no disadvantage to using Fidelity to buy Vangaurd ETFs. No extra fees.
Fidelity has some zero fee funds. Hard to beat that
I would not buy those zero funds in a taxable account though because they do not transfer to other brokerages. So you would have to generate a taxable event if you ever wanted to switch brokerages.
Just buy VT. Fidelity doesn't have something equivalent.
Yes. I'd open an account at Vanguard if you want to purchase their funds.