By Dave Dierking
Periodically, I answer user questions that come up in comment threads and messages in a little more depth. I haven’t done one of these in a little while, but I’ve gotten some great questions lately that are worthy of the in-depth treatment. As always, if there’s a question on your mind, feel free to comment on one of my articles, comment down below or shoot me a message. I may end up using your question in a future Q&A!
Today’s question (lightly edited for clarity)…
Question: In my experience, Fidelity has outstanding customer service too. Could you review their smart beta offerings one day? They have several new ETFs in this category. Thank you for great articles!
Answer: This question came up in the comment thread of the article I wrote recently about Fidelity’s new 0% expense ratio mutual funds. Fidelity, surprisingly, was late to enter the ETF game. The Fidelity Nasdaq Composite Index ETF (ONEQ) has been around since 2003, but it wasn’t until they launched their lineup of sector ETFs in 2013 that Fidelity truly entered the ETF arena. Its roster now consists of 25 ETFs, including 10 that fall into the “smart beta” category.
Fidelity’s sector ETFs are some of the cheapest in their respective spaces charging just 0.08%. Their smart beta ETFs? Not so much. The Momentum, Quality, Value and Low Volatility factor ETFs all charge 0.29%. This is significantly higher than Vanguard’s recently launched lineup of actively managed factor ETFs, which charge 0.13%, and the iShares Edge group of factor ETFs, which charge 0.15%. The fee structure puts Fidelity a bit behind the 8-ball, but it’s also important to consider how the funds’ underlying indices are constructed and if they make sense.
Let’s break down each of them briefly to examine how they’re