BOSTON--(BUSINESS WIRE)--Fidelity Investments®, one of the industry’s largest, most experienced providers of low-cost active and index mutual funds, today announced a series of enhancements to its line-up of index mutual funds, including launching three new equity funds, replacing the Spartan name with Fidelity, and expanding availability of its institutional share classes to investors on and off the Fidelity platform.
Fidelity has been managing index funds for more than 25 years. The company, which is the 2nd largest index mutual fund manager in the industry with more than $216 billion in assets under management,1 now offers 19 Fidelity equity, fixed income and hybrid index mutual funds, 13 Fidelity Freedom® Index Funds, and 12 Fidelity passive ETFs.
“Over nearly three decades, Fidelity has built one of the largest and most compelling index fund offerings in the industry,” said Colby Penzone, senior vice president for Fidelity’s Investment Product Group. “These enhancements build on that legacy and our ongoing commitment to provide tens of millions of customers -- individual investors, workplace retirement plan sponsors and participants, and financial advisors -- access to a wide-array of high-quality, low-cost index funds as well as managed solutions.”
Three New Equity Index Funds
Fidelity is launching three new low-cost Fidelity index funds: Fidelity Large Cap Growth Index Fund, Fidelity Large Cap Value Index Fund, and Fidelity Total International Index Fund. Each new fund is offered with multiple share classes at very competitive prices.
| New Fund/Share Class(ticker) |
| Fidelity Large Cap Growth Index Fund |
|
Investor (FSUIX)
Premium (FSUPX) Institutional (FSWIX) Institutional Premium (FSPGX) |
| Fidelity Large Cap Value Index Fund |
|
Investor (FLCDX)
Premium (FLCHX) Institutional (FLCMX) Institutional Premium (FLCOX) |
| Fidelity Total International Index Fund |
|
Investor (FTIGX)
Premium (FTIPX) Institutional (FTIUX) Institutional Premium (FTIHX) |
Each fund will attempt to replicate the performance of its respective index, before expenses, by normally investing at least 80% of its assets in securities included in the index.
- Fidelity Large Cap Growth Index Fund seeks to provide investment results that correspond to the total return of stocks of large capitalization U.S. companies. The Fund will normally invest at least 80% of its assets in securities included in the Russell 1000® Growth Index.2
- Fidelity Large Cap Value Index Fund seeks to provide investment results that correspond to the total return of stocks of large capitalization U.S. companies. The Fund will normally invest at least 80% of its assets in securities included in the Russell 1000® Value Index.3
- Fidelity Total International Index Fund seeks to provide investment results that correspond to the total return of foreign developed and emerging stock markets. The Fund will normally invest at least 80% of its assets in securities included in the MSCI ACWI (All Country World Index) ex USA Investable Market Index (IMI)4 and in depository receipts representing securities included in the index.
Spartan Index Line-up Rebranded as “Fidelity”
Fidelity has replaced “Spartan” on its line-up of index mutual funds with the Fidelity name, leveraging one of the strongest, most well-known brands in the industry. For example, the Spartan® 500 Index Fund is now named the Fidelity® 500 Index Fund. This move creates consistency in branding across Fidelity’s diverse product line.
As part of this effort, Fidelity has also renamed two of its four underlying index fund share classes. The “Fidelity Advantage Class” has been renamed “Premium Class” and the “Fidelity Advantage Institutional Class” has been renamed “Institutional Premium Class.”
Institutional Share Class Eligibility Expanded
Fidelity has expanded the availability of its index mutual fund line-up. Effective immediately, the company’s Institutional share classes (Institutional and Institutional Premium) are available to investors on and off the Fidelity platform -- both retail and intermediary -- provided they meet eligibility requirements. This addresses growing demand from large intermediary and institutional investors for Fidelity’s low-cost index funds.
| Investor | Premium | Institutional | Institutional Premium | |||||||||
| Employer-sponsored retirement plans | No minimum | No minimum |
$5 million
|
$100 million*
|
||||||||
|
Fee-based
wrap programs |
No minimum | No minimum |
$5 million |
$100 million*
|
||||||||
| Fund of funds | No minimum | No minimum |
$5 million (refers to top-level fund’s investment in fund) |
$100 million*
|
||||||||
| Fidelity-managed 529 plans | No minimum | No minimum | No minimum | No minimum | ||||||||
| Other accounts | $2,500 | $10,000 | $5 million | $100 million* |
*$200 million for Fidelity 500 Index Fund.
Index Enhancements Complement Fidelity’s Active Offering
“While Fidelity believes in providing a choice of low-cost index options and will continue to build out that offering as we have for the past 25 years, we are, of course, strong believers in the power of active management and the value it can provide our customers,” said Penzone. “Market outperformance -- through the compounding of returns -- can be important drivers of wealth creation, and actively managed funds offer investors the opportunity to outperform the market.”
Fidelity’s active equity mutual funds are among the lowest cost in the industry with 141 funds in the lowest quartile of expenses.
According to Fidelity research released earlier this year, by using two simple, objective filters -- mutual funds with lower fees from the five largest fund families by assets -- the average actively managed U.S. large-cap equity fund outperformed its benchmark by 0.18% per year from 1992 through 2015, while the average subset of index funds trailed its benchmark by 0.04%.
While 0.18% per year of outperformance may not seem like a lot, this may translate to more money to spend, or a longer and more secure retirement. As a hypothetical illustration, suppose a retirement investor saves $5,000 per year in two different accounts, one with 0.18% of annual excess return and one with –0.04% of annual excess return (assuming returns are net of fees and a constant “benchmark” return of 7%). At the end of 40 years, the balance for the account with 0.18% of excess return would be more than $64,000 higher than the other account, essentially earning an additional 6.0% of cumulative return.5
Fidelity’s research also revealed that in the other largest equity fund categories (international large cap and U.S. small cap) active managers had a better record of outperforming their benchmarks, even without applying the two simple filters. From 1992 through 2015, actively managed international large-cap funds outperformed their benchmarks by 0.85% per year and U.S. small-cap funds outperformed their benchmarks by 0.99% per year.
“We believe that both active and passive can play a role in a customer’s portfolio,” said Penzone. “Fidelity offers customers great value across both through individual mutual funds and ETFs or through managed solutions.”
About Fidelity Investments
Fidelity’s goal is to make financial expertise broadly accessible and effective in helping people live the lives they want. With assets under administration of $5.3 trillion, including managed assets of $2.0 trillion as of April 30, 2016, we focus on meeting the unique needs of a diverse set of customers: helping more than 25 million people invest their own life savings, nearly 20,000 businesses manage employee benefit programs, as well as providing nearly 10,000 advisory firms with investment and technology solutions to invest their own clients’ money. Privately held for nearly 70 years, Fidelity employs 45,000 associates who are focused on the long-term success of our customers. For more information about Fidelity Investments, visit https://www.fidelity.com/about.
Before investing, consider the funds’ investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.
Diversification and asset allocation does not ensure a profit or guarantee against loss.
Past performance is no guarantee of future results.
Stock markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. Foreign markets can be more volatile than U.S. markets due to increased risks of adverse issuer, political, market or economic developments, all of which are magnified in emerging markets. Investing in stock involves risks, including the loss of principal.
Fidelity Brokerage Services LLC, Member NYSE, SIPC
900 Salem
Street, Smithfield, RI 02917
Fidelity Investments Institutional Services Company, Inc.
500 Salem
Street, Smithfield, RI 02917
National Financial Services LLC, Member NYSE, SIPC,
200 Seaport
Boulevard, Boston, MA 02110
764598.1.0
2016 FMR LLC. All rights reserved.
1 As of May 31, 2016.
2 An unmanaged, market
capitalization-weighted index of those stocks of the 1,000 largest U.S.
domiciled companies that exhibit growth-oriented characteristics.
3
An unmanaged, market capitalization-weighted index of those stocks of
the 1,000 largest U.S. domiciled companies that exhibit value-oriented
characteristics.
4 The MSCI ACWI (All Country World
Index) ex USA Investable Market Index is a market
capitalization-weighted index designed to measure the investable equity
market performance for global investors of large, mid, and small-cap
stocks in developed and emerging markets, excluding the U.S.
5
Impact of 22 basis points: To illustrate the potential impact of 22
basis points, we assumed two hypothetical portfolios, one earning 18
basis points of annual excess return, one earning –4 basis points
(assuming returns are net of fees), both in relation to a hypothetical
benchmark earning 7% constant annual returns. Returns were credited
annually at the end of each year, and investor contributions of $5,000
were added at the beginning of each year. Taxes were not considered.
After 40 years, the outperforming portfolio account balance would be
$1,120,752, while the underperforming portfolio account balance would be
$1,056,704, for a difference of $64,048. This example is for
illustrative purposes only; it does not represent actual or future
performance of any investment, nor is it likely to be duplicated by any
specific investment.
