BOSTON – Fidelity Investments is trimming fees at its largest index mutual funds and making some of its lowest-cost options accessible to a larger number of fund shareholders, including those with as little as $2,500 to invest.
The moves announced last week follow recent investment fee cuts involving mutual funds or exchange-traded funds at rivals such as Vanguard, BlackRock and Charles Schwab.
Fidelitys moves affect mutual funds holding about $100 billion in assets, out of about $1.6 billion that the Boston company manages.
These involve index funds, low-cost options that seek to match performance of a basket of stocks or bonds. Fees are unchanged at Fidelitys hundreds of actively managed funds, which seek to beat the market.
Investment management fees are typically lower at index funds because investors arent paying managers to pick investments.
Fidelity is lowering the amount of money a fund shareholder must invest to quality for lower-cost shares at 22 funds, including 14 in its Spartan family of stock and bond index funds.
Starting Jan. 1, the investment minimum for qualifying to invest in Investor Class shares will be reduced to $2,500 from the previous $10,000. Individual investors in a lower-cost share class called Fidelity Advantage will need to meet a $10,000 threshold, down from the previous minimum of $100,000.
Qualifying for a lower-cost share class can mean small reductions in the expenses charged, and long-term investors can earn significant savings.
For example, starting next month, investors will pay an expense ratio of 0.05 percent – or a fee of $5 a year for every $10,000 invested – in the Advantage shares of Fidelitys largest index fund, the $49 billion Spartan 500 Index Fund.
Thats down from the previous 0.06 percent, a level that already made Spartan 500 Index one of the industrys lowest-cost stock funds.