Fidelity has lowered the fees on its Fidelity Freedom Index Funds to just 16 basis points from 19 basis points. It's not a big cut in real dollars, but it does make the Freedom Index Fund lineup slightly cheaper than Vanguard's target-date funds, which charge 18 basis points.
“They're taking the fight to Vanguard on its turf,” said Jeff Tjornehoj, a senior research analyst at Lipper, adding it behooves Fidelity to start competing with Vanguard on the low-cost front now.
Vanguard has closed the gap between it and Fidelity, the largest provider of target-date funds, over the last five years.
Vanguard's target-date funds have grown to $148 billion as of the end of October, up 393% from 2008, according to Lipper. Fidelity's target-date funds have grown to $175 billion, up 160%, in the same time period.
Nicole Goodnow, a spokeswoman for Fidelity, did not return calls seeking comment.