Boston-based Fidelity Investments announced on Thursday that it is launching two index funds with zero expense ratios on 3 August.
The firm claims the Zero Total Market Index fund and the Zero International Index fund are the industry’s first self-index mutual funds with a true zero expense ratio.
The funds will only be sold in the US and are not Ucits compliant.
No plans to follow
Fidelity International, the firm’s sister company, told Portfolio Adviser it has no plans to launch zero-fee index funds to its clients in a Ucits format.
“Fidelity International already offers a range of market leading, low-cost index funds globally. We continually review our product range to make sure we are offering value for clients but we currently have no plans to launch similar products or reduce our fees any further,” a spokesperson said.
Lowering fees elsewhere
Fidelity Investments also announced plans to cut fees on all other index funds by an average of 35%.
In a webcast announcing the move, Kathleen Murphy, president of Fidelity Personal Investing, said: “With these changes Fidelity is delivering value to investors that is unmatched by any other firm in financial services as well as the type of straightforward pricing and investment choices that investors deserve.”
Another shot in the price war
Last October, Fidelity International announced it would be adopting a variable management fee across its fund range and earlier this week, it rolled out a variable management fee share class for five of its flagship Oeics, including the £3.4bn Special Situations fund. It followed in the footsteps of its transatlantic sister company, which already had the variable fees.
The firm also launched six low cost cross-border equity index funds with fees starting at 0.06% for the S&P 500 fund and reaching 0.20% for the MSCI Emerging Markets fund, and slash 1bps from the OCF on three existing UK-domiciled index funds.
In March, Lyxor launched what it claimed to be the cheapest ETF in Europe with a total expense ratio of 0.04%.
