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To review: I asserted FXAIX was (simply) the best of the (plain-vanilla) SP500 indices.
Let us take your 5y as the period of merit. Here is $10k growth w reinvesting:
USPRX - $12,098.17. Loser. Oi. Quite aside from the yuge min. FDFIX - $12,296.16. Winner by $14 ! But wait. FXAIX - $12,281.93. See next.
(God, I pray my figure reading is right. It's like being in court.)
How did FDFIX do it?
Ooh: For 1y, D lags A by $3. For 1 month, by half that. But for 3mos, it's the other way round: A lags D by over a dollar.
Could it be their strategy? Can it be that FDFIX --- 'Flex', as you pointed out --- is a juiced SP500 fund? Let's look at their strategies:
A - Strategy Normally investing at least 80% of assets in common stocks included in the S&P 500 Index, which broadly represents the performance of common stocks publicly traded in the United States. D - Strategy Normally investing at least 80% of assets in common stocks included in the Fidelity U.S. Large Cap Index, which is a float-adjusted market capitalization-weighted index designed to reflect the performance of U.S. large capitalization stocks. It is a subset of the Fidelity U.S. Total Investable Market Index representing the largest companies. Lending securities to earn income for the fund.
So. Steroids? Well, a different (presumably wider?) stock selection range (a small constraint, surely, or is it advantage? Or, rather, one would expect D to outperform waaaaay better than A given its flex?). Also, income from shorting, right?
So the picayune question is Why does D not outdo A --- which as I originally posted is the best SP500 index fund [by any reasonable criteria, and for the last 5y] --- by a lot more than a few bucks? What's the value added by Fido's investment broadening and by the ability to short?
Not too long ago someone mentioned WCPBX in another thread. The only brokerage I could find that sold it for under $1M was Vanguard ($500 min). At Fido the min is $1M (even in IRAs), same at Schwab.
Wells Fargo will also sell it to you for $1M, but not if you're a DIY investor (WellsTrade). In fact, there are only three Weitz funds that Wells Fargo sells through WellsTrade: WBALX, WPOPX, and WVALX.
Every so often one finds a fund at Vanguard that one can't get elsewhere, at least without ponying up a seven (or higher) figure amount.
Vanguard offers the least expensive I shares for many Pimco mutual funds while the more costly I-3 shares are Fidelity's cheapest Pimco share class. Pimco I shares were previously available at Fidelity several years ago.
I asserted FXAIX was (simply) the best of the (plain-vanilla) SP500 indices.
And I took that to be any fund that Lipper and MFO classify as a plain vanilla S&P 500 Index fund. https://lipperleaders.com/index.aspx (Lipper screener; search for S&P 500 funds)
Let us take your 5y as the period of merit
I used 5 years only because FDFIX doesn't have a ten year record. When I scanned Lipper's S&P 500 funds rated "5" for total return, I used 10 years unless it wasn't available. And it certainly wouldn't make sense to compare FDIFX's 5 year record with FXAIX's ten year record.
A - Strategy Normally investing at least 80% of assets in common stocks included in the S&P 500 Index, which broadly represents the performance of common stocks publicly traded in the United States.
So it has the freedom to do anything it wants with the remaining 20% of its portfolio and all it can do is track its index? Of course that's a ridiculous question. As is "one would expect D to outperform waaaaay better than A given its flex, no?"
For the record, "Flex" is the name that Fidelity gave to its internal use zero ER funds. Nothing more.
Lending securities to earn income for the fund. ... Also, income from shorting, correct?
Now you've gone off the deep end. Lots of funds lend securities for income. That's not shorting, just the opposite. They lend their shares so someone else (the borrower) can short the securities. And pay the funds for the privilege. Vanguard has been doing that for decades. That's how, in some years, its fund managed to beat its benchmark. Or are you saying that VFINX / VFIAX is not a plain vanilla S&P index fund?
The [Vanguard 500] fund has historically used securities lending to generate additional income to offset expenses.
You may not be aware that Fidelity (and Schwab and ...) provide individual investors the same opportunity to generate income. This page describes both how to set that up at Fidelity and more broadly the risks and benefits of security lending. https://www.fidelity.com/trading/fully-paid-lending
I have received shorting fees from Fidelity for decades depending on the fund or stock, so I think I understand that process.
D’s zero ER leads to another instance of the question Why does it not then outperform and become another clear winner in a broader SP500 category. Speaking of which, why did you not speculate about D’s comparatively expanded strategy? You must have thoughts about how it effectively differs from A’s and what that should mean — ?
Seems to me the inability of FDFIX, with its zero ER and possible advantage in shorting fees, to decisively outdo FXAIX in any period gives support to my original assertion.
Comments
To review:
I asserted FXAIX was (simply) the best of the (plain-vanilla) SP500 indices.
Let us take your 5y as the period of merit. Here is $10k growth w reinvesting:
USPRX - $12,098.17. Loser. Oi. Quite aside from the yuge min.
FDFIX - $12,296.16. Winner by $14 ! But wait.
FXAIX - $12,281.93. See next.
(God, I pray my figure reading is right. It's like being in court.)
How did FDFIX do it?
Ooh: For 1y, D lags A by $3. For 1 month, by half that.
But for 3mos, it's the other way round: A lags D by over a dollar.
Could it be their strategy? Can it be that FDFIX --- 'Flex', as you pointed out --- is a juiced SP500 fund? Let's look at their strategies:
A - Strategy
Normally investing at least 80% of assets in common stocks included in the S&P 500 Index, which broadly represents the performance of common stocks publicly traded in the United States.
D - Strategy
Normally investing at least 80% of assets in common stocks included in the Fidelity U.S. Large Cap Index, which is a float-adjusted market capitalization-weighted index designed to reflect the performance of U.S. large capitalization stocks. It is a subset of the Fidelity U.S. Total Investable Market Index representing the largest companies. Lending securities to earn income for the fund.
So. Steroids? Well, a different (presumably wider?) stock selection range (a small constraint, surely, or is it advantage?
Or, rather, one would expect D to outperform waaaaay better than A given its flex?). Also, income from shorting, right?
So the picayune question is Why does D not outdo A --- which as I originally posted is the best SP500 index fund [by any reasonable criteria, and for the last 5y] --- by a lot more than a few bucks? What's the value added by Fido's investment broadening and by the ability to short?
Wells Fargo will also sell it to you for $1M, but not if you're a DIY investor (WellsTrade). In fact, there are only three Weitz funds that Wells Fargo sells through WellsTrade: WBALX, WPOPX, and WVALX.
https://www.wellsfargoadvisors.com/research-center/mutual-funds.htm
(screen for Weitz funds)
Every so often one finds a fund at Vanguard that one can't get elsewhere, at least without ponying up a seven (or higher) figure amount.
while the more costly I-3 shares are Fidelity's cheapest Pimco share class.
Pimco I shares were previously available at Fidelity several years ago.
And I took that to be any fund that Lipper and MFO classify as a plain vanilla S&P 500 Index fund.
https://lipperleaders.com/index.aspx (Lipper screener; search for S&P 500 funds)
Let us take your 5y as the period of merit
I used 5 years only because FDFIX doesn't have a ten year record. When I scanned Lipper's S&P 500 funds rated "5" for total return, I used 10 years unless it wasn't available. And it certainly wouldn't make sense to compare FDIFX's 5 year record with FXAIX's ten year record.
A - Strategy
Normally investing at least 80% of assets in common stocks included in the S&P 500 Index, which broadly represents the performance of common stocks publicly traded in the United States.
So it has the freedom to do anything it wants with the remaining 20% of its portfolio and all it can do is track its index? Of course that's a ridiculous question. As is "one would expect D to outperform waaaaay better than A given its flex, no?"
For the record, "Flex" is the name that Fidelity gave to its internal use zero ER funds. Nothing more.
Lending securities to earn income for the fund. ... Also, income from shorting, correct?
Now you've gone off the deep end. Lots of funds lend securities for income. That's not shorting, just the opposite. They lend their shares so someone else (the borrower) can short the securities. And pay the funds for the privilege. Vanguard has been doing that for decades. That's how, in some years, its fund managed to beat its benchmark. Or are you saying that VFINX / VFIAX is not a plain vanilla S&P index fund? https://www.morningstar.com/funds/what-is-vanguard-500-indexs-achilles-heel
You may not be aware that Fidelity (and Schwab and ...) provide individual investors the same opportunity to generate income. This page describes both how to set that up at Fidelity and more broadly the risks and benefits of security lending.
https://www.fidelity.com/trading/fully-paid-lending
D’s zero ER leads to another instance of the question Why does it not then outperform and become another clear winner in a broader SP500 category. Speaking of which, why did you not speculate about D’s comparatively expanded strategy? You must have thoughts about how it effectively differs from A’s and what that should mean — ?
Seems to me the inability of FDFIX, with its zero ER and possible advantage in shorting fees, to decisively outdo FXAIX in any period gives support to my original assertion.