Vanguard vs. Fidelity - low cost index funds

**meaghanchan** · 09-19-2006, 03:27 PM

Re: Vanguard vs. Fidelity - low cost index funds

Thanks for posting the article!

It's true that some of Fidelity's index funds have lower rates than some of Vanguard's. And if you are going to go only with those particular low-cost 'spartan' index funds that Fidelity offers, you're probably better go with them. However, I think it's important to do more research than just 'I want a S&P 500 index fund- Fidelity has the lowest costs for that fund- I'll go with them'. Particularly if you want to consolidate all your accounts at one company, to avoid low-balance fees or just to simplify your life.

If you get into Fidelity based on their couple of great index funds, and later you decide that you want to slice and dice your portfolio a bit- in other words, divide up your large-cap, mid-cap, and small-cap stocks, or your growth and value stocks, you might find you're paying more for those index funds, if Fidelity even offers them, than you would at Vanguard.

I'm not saying that Fidelity's a bad company or not the way to go for some people (they're a great company, and they are). I just wanted to point out the other side of the coin.

**safari** · 09-19-2006, 04:48 PM

Re: Vanguard vs. Fidelity - low cost index funds

There are several reasons why I chose Fidelity over Vanguard, besides their low cost index funds.

- Fidelity has a wider selection of no transation fee mutual funds than Vanguard
- I have 401(k) with Fidelity, and I like having all investment accounts in one place. It also helps me to get a lower comission rate because they count all accounts when calculating the total balance, and comission rates are based on the total balance.
- Excellent customer service
- Fidelity offers great tools for researching mutual funds and stocks
- More 3rd party analysis than at any other brokerage firm
- I will get 25,000 United Mileage Plus Miles for opening a Fidelity Account, good for a roundtrip ticket anywhere in the continental US

**Ima saver** · 09-20-2006, 08:26 AM

Re: Vanguard vs. Fidelity - low cost index funds

I have most of my mutual funds at Vanguard, only one at Fidelity. I like both companies. Does anyone know anything about their energy funds? I am looking at those right now.

**meaghanchan** · 09-20-2006, 03:30 PM

Re: Vanguard vs. Fidelity - low cost index funds

Ima- I don't want to get this thread off-track too much, but here are my thoughts about energy funds in general. Vanguard's and Fidelity's are probably not too different, in what they hold and what they return. Correct me if I'm wrong.

The energy companies have had a great 10 years- lots of profits, lots of money going to investors, especially due to higher gas prices lately. However, I wouldn't invest a large amount of money in any one sector, energy included. If I remember correctly, you hold an S&P 500 index fund, which already holds the top energy companies (Exxon Mobil is like its #2 holding, IIRC). So by buying an additional energy fund, you'll be overweighting the energy sector. Now, it's possible the energy companies will have another great 10 years, and you'll make out like a bandit and be very happy. But on the other hand, remember the tech crash of 2000-2002! Any sector fund is vulnerable to a big crash like that. I don't really see it happening with energy, because we all need gas, but, well, stranger things have happened.

In sum: Are you investing in the fund because it's had a great 10 years or because you believe that the energy sector is going to be strong in the future? If it's the latter- putting 5%-10% of your money on a bet like that might not be a bad move. If it's the former- I'd avoid it. Funds that have had great decades can have lousy decades... Watch out for reversion to the mean.

**scfr** · 09-24-2006, 09:24 AM

Re: Vanguard vs. Fidelity - low cost index funds

We've been super happy with Vanguard. Have been with them for over 10 years.

We swore off Fidelity when we had horrible problems with their customer service department ---when settling a relative's estate, they kept insisting that the deceased person sign paperwork, in spite of our stating repeatedly in many phone calls "They cannot sign. They are DEAD." Why would we trust a company that can't understand "DEAD" with our money?

**Ima saver** · 09-24-2006, 09:31 AM

Re: Vanguard vs. Fidelity - low cost index funds

Thanks for the advice, meaghanchan. I have been with vanguard for about 15 years. I did not go with Fidelity because they use to charge a 3% fee. I have never had a problem with Vanguard ever!

**LuxLiving** · 09-24-2006, 09:42 AM

Re: Vanguard vs. Fidelity - low cost index funds

Wow, didn't understand DEAD. We have had great experiences with the Fidelity customer service department. They have been very helpful.

**sweeps** · 09-24-2006, 10:22 AM

Re: Vanguard vs. Fidelity - low cost index funds

Originally posted by LuxLiving

Wow, didn't understand DEAD. We have had great experiences with the Fidelity customer service department. They have been very helpful.

Lux, I guess as long as you don't die, you'll be fine with Fidelity.

Vanguard vs. Fidelity - low cost index funds