Fidelity Fires Back At Vanguard With Sector ETF Fee Cuts

Markets Benzinga

When Fidelity introduced its lineup of 10 sector exchange-traded funds, which has since grown to include a real estate fund, three years ago, those ETFs were the least expensive sector funds on the market.

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Well, Vanguard, also known as Mecca for thrifty investors, did not like Fidelity's low fees and although it took Pennsylvania-Vanguard until late 2015, the firm was able to regain the title of issuer of the least expensive sector ETFs when it unveiled another batch of fee cuts.

Now Boston-based Fidelity is apparently serious about being home to the cheapest sector ETFs, because the issuer announced it is trimming fees on its 11 sector ETFs. The announcement was made as part of a broader fee reduction plan unveiled by Fidelity on Tuesday.

The Battle Continues

As of July 1, Fidelity's 11 sector ETFs will charge 0.084 percent per year, or $8.40 for every $10,000 invested. That is down from the ETFs' original expense ratio of 0.12 percent a year. Fidelity clients can enjoy added cost savings because the firm's sector ETFs, among other ETFs, are available to its clients on a commission-free basis.

Related Link: Deutsche AM Adds Multi-Factor Small-Cap ETF

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The average expenses across Fidelity's index fund line-up will decrease to 10.2 basis points (0.102 percent), down from 11.6 basis points today. The expense reductions are expected to save current shareholders approximately $20 million annually, according to a statement.

Fidelity's well-known sector ETFs include the following, among others;

  • Fidelity MSCI Consumer Discretionary Index ETF (FDIS)
  • Fidelity MSCI Energy Index ETF (FENY)
  • Fidelity MSCI Health Care Index ETF (FHLC)

So in the race to almost free among sector ETFs, it is Vanguard's. If history is an accurate guide, Vanguard will respond.

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