Fidelity Investments on Tuesday announced the debut of five index mutual funds that all have expense ratios of 0.05 percent, touting them as more cost-effective choices than similar funds from rival Vanguard.
The Fidelity Mid Cap Growth Index Fund, for example, charges two basis points less than the Vanguard Mid-Cap Growth Index Fund Admiral Shares. And the same expense ratio differential exists with the Fidelity Mid Cap Value Index Fund, Fidelity Small Cap Growth Index Fund and Fidelity Small Cap Value Index Fund versus comparable index-based mid-cap value, small-cap growth and small-cap value funds from Vanguard.
That said, Vanguard offers index-based mid-cap and small-cap blend mutual funds with expense ratios of 0.05 percent. And at the risk of mixing metaphors, the former product, the Vanguard Mid-Cap Index Fund Admiral Shares, is also available as an exchange-traded fund with an expense ratio of 0.04 percent
The fifth mutual fund in this group of new products, the Fidelity Municipal Bond Index Fund, easily tops the expense ratios of Vanguard’s 13 municipal bond mutual funds that cost from 0.09 percent to 0.17 percent, depending on the product.
In a press statement, Fidelity noted that its index funds don’t have investment minimums for people who invest directly with Fidelity or through a financial advisor.