Fidelity cutting fees on large index funds

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, disclosed Tuesday, follow recent investment fee cuts involving mutual funds or exchange-traded funds at rivals­ such as Vanguard, BlackRock, and Charles Schwab.

These involve index funds, low-cost options that seek to match the performance of a basket of stocks or bonds. Fees are unchanged at Fidelity’s hundreds of actively managed funds, which seek to beat the market.


Fidelity is lowering the amount of money a shareholder must invest to quality for lower-cost shares at 22 funds, including 14 in its Spartan family of stock and bond index funds.

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Starting Jan. 1, the investment minimum for qualifying to invest in Investor Class shares will be reduced to $2,500 from $10,000. Individual investors in a lower-cost share class called Fidelity Advantage will need to meet a $10,000 threshhold, down from the previous minimum of $100,000.

Qualifying for a lower-cost share class can mean small reductions in expenses charged, and long-term investors can earn significant savings.

Overall, Fidelity is cutting expense ratios — the amount needed to cover a fund’s operations costs — at eight Spartan index funds.

While the reduction is modest for the Spartan 500 Index Advantage shares, the cuts are larger at some other funds. For example, expenses for Investor shares of the Spartan Small Cap Index fund will fall to 0.30 percent from 0.38 percent, while that fund’s Advantage shares will charge 0.16 percent, down from 0.24 percent.


The moves are aimed at ‘‘providing workplace retirement plan sponsors and individual investors access to a wide-array of high-quality index funds at some of the most competitive pricing in the industry,’’ said J.S. Wynant, an executive vice president at ­Fidelity.

Investors have become more cost-conscious in recent years, showing a preference for index mutual funds and index-oriented ETFs. Investors deposited a net $246 billion into index funds and other index products investing in stocks from 2008 through September 2012, according to Morningstar Inc. During that period, withdrawals exceeded deposits in managed stock funds and products, with net withdrawals of nearly $700 billion.