Fidelity Investments has taken another measure to keep in step with the competition on the price front. The firm has lowered its bond fund fees between five and 20 basis points in a bid to get more investors and advisers to invest in fixed-income mutual funds.
"We believe that reducing fees will now make us even more visible to investors and advisors, and will make an already successful bond fund product line even better," said David L. Murphy, senior vice president and head of fixed income. He emphasized the important role of fixed income as a component of a diversified portfolio.
Many Fidelity investors have been underallocated in fixed income, said Jeffrey R. Carney, president of Fidelity Personal Investments. The investment strategies of the retail funds have not changed, but "this 45 basis point pricing places our retail bond fund line-up among the lowest-cost such product lines in the industry," he said.
The direct-sold taxable investment-grade funds all now carry annual expenses of 45 basis points; formerly, the dozen funds had fees ranging from 50 to 65 basis points. The management fees on the eight taxable Advisor funds and one variable insurance product have been uniformly dropped by 10 basis points. Depending on the existing expense cap, this has reduced overall expenses up to 17 basis points.
Fidelity has moved to lower fees across its various products and within its mutual fund product lines, cutting fees in five domestic equity index funds and, more recently, eliminating the management fee for its lifecycle funds-of-funds family, Freedom Funds. The fee reductions in the fixed-income funds pass through to Freedom Fund investors as well as 529 plan investors.