BOSTON — Fidelity Investments announced another reduction in fees for plan sponsors and participants who invest specified minimum amounts in its Spartan equity index funds. Employer-sponsored retirement plans that have a minimum of $100 million in one of Fidelity's five Spartan equity index funds will see fees drop to 7 basis points from 10 basis points, according to a news release.
According to a Fidelity news release, the industry average for no-load or front-end-load index funds in the same Morningstar category as Fidelity's Spartan funds was between 25 basis points and 44 basis points, depending on the particular Spartan fund.
John Demming, a spokesman for Vanguard Group, a leading provider of low-cost index funds, said his company has no plans to respond to Fidelity's move. "Our average expense ratio is already the lowest in the industry," at 23 basis points across a wide range of stock, bond, balanced, passive and actively managed funds, he said. Meanwhile, Vanguard's Total Stock Market VIPER exchange traded fund already has an expense ratio of 7 basis points, he said.
Sonya Morris, who covers the Vanguard Group for Morningstar Inc., said the latest move follows Vanguard's response to Fidelity's previous fee cut to 10 basis points, which included lowering the minimum investment amount needed to qualify for Vanguard's lowest Admiral fee class. She said the dueling cuts by Fidelity and Vanguard was making index funds an even more attractive option for investors.