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Defined Contribution

Fidelity lowers fees for blended target-date funds

Creates new share classes for larger investors, resulting in lower fees

Fidelity Investments lowered fees for its Fidelity Institutional Asset Management blend target-date commingled pools on Sept. 1, particularly benefiting investors with target-date assets above $3 billion.

Previously, the net expense fee for the active-passive commingled pools, available only to institutional investors, included a management fee and an underlying expense fee, which covered administrative costs incurred by the Fidelity and Geode Capital Management investment strategies used in the target-date approach. Geode is Fidelity's subadviser for passively managed equity strategies.

The underlying expense fee has been eliminated and the net cost of the pools lowered, said Eric Kaplan, head of target-date product at Fidelity Investments.

The firm also added more share classes for the institutional pools to accommodate investors with target-date assets above $3 billion. The lowest previous net fees were 26 basis points.

The new net expense fees for the blended target-date funds are:

  • Less than $100 million in assets, 32 basis points (previously, 42 basis points).
  • $100 million to $300 million, 32 basis points (37 basis points).
  • $300 million to $500 million, 30 basis points (32 basis points)
  • $500 million to $1 billion, 26 basis points (28 basis points).
  • $1 billion to $3 billion, 24 basis points (26 basis points).
  • $3 billion to $5 billion, 21 basis points (N/A).
  • $5 billion to $7 billion, 20 basis points (N/A).
  • $7 billion and more, 18 basis points (N/A).
Fidelity manages $25.6 billion in the blended active-passive target-date commingled pools and a total of $2.6 trillion.