newgun said:To compare funds' exp ratio most of the time is meaningless. The important thing is the total return (if taxable, tax efficiency as well), not the exp ratio.

Wrong. As Bogle showed many years ago, and many others have shown since, expenses are the single largest determinant of return for the individual investor.

The "total return" you believe is important only reflects past results. Investors who chase returns based on past performance will get the lowest return of all.

newgun said:Why you say a funder manager is a better one than others you don't consider "past results"? If you were going to choose between one fund with an exp ratio of 0.5% and past 10 year annualized total return of 10%, and another with exp ratio of 0.9% and ATR of 15%, you would choose the first? That probably makes sense to you but certainly doesn't make sense to me.

First, I do not want any 'fund managers' at all. I invest exclusively in very low cost index funds/ETFs, whose managers' only job is to mirror the index/asset class their funds follow.

Second, when I came up with my own asset allocation (US large, US small/mid, US REIT, MSCI EAFE, emerging mkts), I did not care what each sector had done in the prior year or decade. My only interest was in finding those funds/ETFs that closely matched their sector for the lowest possible cost.

I am not sure you understand the concepts of portfolio management, and may want to check out Bernstein, Bogle, and others, as well as reading more here on FW. Investors have lost a lot of money chasing funds based on past returns, despite the warning of "past performance is no guarantee of future results." Even Scott Burns' very basic Couch Potato Portfolio (Vanguard SP500 Index and Vanguard Bond Index) consistently beats the vast majority of fund managers.

UncaMikey said:newgun said:To compare funds' exp ratio most of the time is meaningless. The important thing is the total return (if taxable, tax efficiency as well), not the exp ratio.

Wrong. As Bogle showed many years ago, and many others have shown since, expenses are the single largest determinant of return for the individual investor.


He should probably push to lower the fees on vanguard's index funds (that individual investors can afford to buy) to where fidelity is then...

furballi said:Vanguard has the lowest cost, but their best fund (healthcare) requires a lot of $ to join. Vanguard can nickel and dime you with fee if you don't have the minimum balance. If you're are a set n forget type of investor, then Vanguard may the best in the long run. Once your individual fund exceeds $50K, you can join the Admiral tier for slightly lower expense ratio.

Fidelity has more quality MFs, but the management fee is a little higher. I find the traders to be quite informed about the general daily stuffs. If you tend to bounce from funds to funds to chase the market, or intend to trade stock agressively, then go with Fidelity.

I have both.

heathcare fund is their best?

ticker symbol?

vinster said:

If it's a publicly available mutual fund, there shouldn't be any problem transferring it over without converting it to cash.

What would be the point of the transfer just to keep Vanguard's mutual fund. The reason for switching was to get Fidelity's lower expenses.

asdf9876 said:vinster said:

If it's a publicly available mutual fund, there shouldn't be any problem transferring it over without converting it to cash.

What would be the point of the transfer just to keep Vanguard's mutual fund. The reason for switching was to get Fidelity's lower expenses.

You were worried about being out of the market while doing the transfer. Once you transfer the Vanguard fund over, sell it and buy the Fidelity fund.

asdf9876 said:Ok, you guys have convinced me to pull my large (>10K) accounts over to Fidelity.

I wanted to start with a 20K Roth IRA in a 500 index. However, on the fidelity site it says "please allow 3-5 weeks for transfer to be complete". Now I'm sure they don't sell my account on day 1 and deposit it on day 35 but still, 5 weeks!

I mean daily fluctuations in the stock market can be .5%-1.0%. If I lost out on 3 solid days of 0.5% each that means it would take 15 years to make my money back on lower expenses.

I'm going to stick with Vanguard for existing accounts.

Anyone have any experience? I'm not trying to fee chase, I think I've reached a point where I can meet the minimums with Fidelity and I'd like to unify all of my accounts under one house. This gives me simplicity and added benefits from appearing as a bigger customer.
I was in this situation last year. I sold the vg S&P500 funds in my vg roth ira account. I asked vg for a check to be mailed to my home which came in 5-6 business days. I went to a fido branch and deposited the check in my fidelity roth ira cash account. The check was creditted right away and I was immediately invested in the cash option, in the muni money mkt fund. I waited until the S&P500 was below the level it was at when I sold it. Took a few weeks but I bought back in at a lower cost basis. IRA transfers need to be completed within 60 days, and I was worried, but I didn't need to worry because the 60 day period ended it when I deposited the vg IRA funds in my fido IRA account, or 5-6 business days. It worked out for me because I was able to buy back in at a lower cost, earned money market interest while in cash, and it was a tax-free transaction. I took a risk because the S&P 500 could have gone straight up, never to return below my old cost basis like it did in the late 90's. If this had happened, that chunk of cash would have underperformed the index for the year...a performance drag that stays with you every year until retirement. However, the S&P 500 hardly ever shoots straight up like in the dot-com days. It tends to go up and down on its climb. I don't try to time the market, and I was nervous waiting to buy back in, but in the end it worked out. You have to compare the difference in the exp ratio (7bp @ fido vs 18bp at vg) X assets transferred over time. So for me the risk was minimal.

ETFnerd said:Now if I could only have some tax losses to offset the gains in my taxable accounts, I would move those too.
Since you're now talking about a taxable account, this brings up an important detail to consider. While Fidelity is a privately owned company that is ultimately interested in earning its owners money, Vanguard is set up with a fairly unique structure where the shareholders of its various mutual funds ARE the owners. The expense ratios for the individual mutual funds represent the actual management costs of running the mutual fund, and you don't have to worry about Vanguard deciding to raise its expense ratios in the future if they decide they want to make more money.

By contrast, Fidelity is a for profit company that could raise its expense ratio at any time. What investors should pay particular attention to is that Fidelity currently outright subsidizes some of the key funds that are mentioned as being cheaper as loss leaders to convince people to opt for Fidelity for all their mutual fund needs. For example the Fidelity Spartan Index Fund actually costs Fidelity a roughly .17% management cost per share of the fund, but they currently subsidize the fund so they are currently charging a merely .10% expense ratio and Fidelity is actually losing money on the fund. (See the Morningstar link below for details.)
http://quicktake.morningstar.com/FundNet/Fees.aspx?Country=USA&Symbol=FSIIX

The concern is whether this situation will continue in the future or once the Fidelity funds in question have grown allot, Fidelity could raise their fees substantially so the funds expense ratios are higher than the management costs to turn the funds into moneymakers for Fidelity. If this happens several years down the road and you have allot of capital gains in these taxable account funds at that point, it can end up being pretty unpleasant to switch back to Vanguard again. Basically this is something you should keep in mind when making your decisions of which company to opt for in your taxable accounts.

While it technically true that Fidelity has said that for the funds where it voluntarily choose to subsidize them for the moment that the funds expense ratios can't be raised without a vote of the shareholders, in practice this is no real obstacle since Fidelity can just the tell the shareholders they need to accept the expense ratio raise or the fund will be liquidated (with an identical fund except for the higher expense ratio being created at the same time).

Mordoch said: While it technically true that Fidelity has said that for the funds where it voluntarily choose to subsidize them for the moment that the funds expense ratios can't be raised without a vote of the shareholders, in practice this is no real obstacle since Fidelity can just the tell the shareholders they need to accept the expense ratio raise or the fund will be liquidated (with an identical fund except for the higher expense ratio being created at the same time).Since you changed the post, FMR cannot liquidate the fund. It can quit as its investment manager (would never happen that they would walk away from billions in assets) and the fund board would choose a new investment manager. Which investment manager is going to turn away billions in assets. Although it may appear that Fido is losing money on these spartans, that is not the case. It is a flaw of accounting having to do with marketing cost allocation, salary allocation, overhead allocation and they do not count the income they derive from lending portfolio securities as a negative expense. Fido does not lose money in these funds.

Whether FMR can influence the cronies on the fund board to do something against the interest of the shareholders is a governance issue, and there are ways to achieve what you said.

The approach that FMR has used in the past is to close the current fund to new shareholders with the excuse that the fund is too large, and start a similar portfolio with a higher expense ratio. This has happened in the last couple of years with an international fund, but fund assets are very fluid and sensitive to these kinds of tricks. Even if they close a fund to new investors, generally existing investors can continue to invest in a closed fund.

I recently got out of my job having a good amount of money on my 401k. The mutual funds from my company's 401k was total crap and I moved it over to vanguard. The funds alone already went up 10% since last October and I never looked back.