Part soap-opera here. Also - some interesting takes on Fidelity.
"The issue is not that Fidelity lacks good products, it’s that the firm hasn’t done as well as it needs to in marketing itself, says James Lowell III, chief investment officer of Adviser Investments and editor of Fidelity Investor, an independent newsletter. “Where they have failed utterly is to attract inflows,” says Lowell. “That’s where they’re getting smoked by literally inferior products, even high-priced products. ..."
http://www.businessweek.com/articles/2012-12-20/fidelity-investments-abby-johnson-the-invisible-heir
Comments
Diversified Emerging Market: 0.33%/0.22% vs. 0.33%/0.18% (Fidelity vs. Vanguard)
Foreign Large Blend (broad based): 0.24%/0.18% vs. 0.30%/0.15% (Spartan Glbl x-US vs. FTSE AW x-US)
Foreign Large Blend (EAFE): 0.11%/0.07% vs. 0.20%/0.10%
(prospectuses state 0.20% for Fidelity Inv and Vanguard Inv; remember that Fidelity used to waive fees down to 0.10% while Vanguard doesn't bait-and-switch)
Intermediate Term Bond (total mkt) : 0.22%/0.12% vs. 0.22%/0.10%
Large Blend (S&P 500): 0.10%/0.07% vs. 0.17%/0.05%
Large Blend (total mkt): 0.10%/0.07% vs. 0.17%/0.05%
Mid Cap Blend (extended mkt): 0.26%/0.12% vs. 0.24%/0.10%
Real Estate: 0.26%/0.12% vs. 0.24%/0.10%
Small Cap: 0.31%/0.17% vs. 0.24%/0.10%
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Once one goes up to $10K investment, Vanguard seems to win everywhere (except, arguably for EAFE index funds, but see comments there). Since the issue is attracting assets, the small $3K accounts won't make nearly the difference that the $10K+ accounts do. So for investors putting more than a few dollars into their accounts (or expecting to grow their accounts), Vanguard is the cheaper attraction.
Not that I think a couple of basis points one way or another matters - it's more how well the fund is run, how it manages cash flow (which more than makes up for petty differences in ERs), how well they track their indexes, how desirable their chosen indexes are, etc.
Fidelity does have some fine products, more than I had thought. But overall, its funds are decidedly lackluster. As noted in the article, Fidelity long ago gave up the idea of maximizing AUM and cares more about the assets in accounts (brokerage).
One can drive people to Fidelity while maintaining objectivity (independence, if you will) among Fidelity funds. That's what he sells - advice for Fidelity investors. So I don't see a lack of objectivity vis a vis Vanguard diminishing the quality (real or perceived) of his advice among the funds he covers.
But I do think he undercuts his claim that Fidelity is "getting smoked by literally" inferior, high-priced products. The example he gives is Vanguard, and the numbers don't lie. Vanguard is the lower priced (or at least not the higher priced) product for all index funds at the $10K level. (For investors with less money to commit, Vanguard offers another share class with the same ER as its $10K Admiral shares - but you have to use a broker to buy those shares.)
What Bloomberg did was consult an expert on Fidelity funds. They did not consult an expert on the world of fund families, and that was their error. Lowell's expertise is in what Fidelity funds invest in, how they're run, which Fidelity funds are better for which investors. Not how Fidelity markets its funds.