On August 12, 2024, Fidelity Investments implemented a significant change to its transaction fee structure, impacting investors who trade mutual funds from the Vanguard and Dodge & Cox fund families. The online trading fee for purchasing these funds has increased from $75 to $100 per transaction.
What’s Changed?
Previously, the online transaction fee for purchasing most mutual funds on Fidelity’s platform was either $49.95 or $75, depending on the specific fund and the trading channel used. However, the recent update has introduced a new fee tier for Vanguard mutual funds, raising the cost to $100 per transaction.
This fee applies to new purchases, one-time subsequent purchases, and even the buy-side of exchanges.
For those who regularly invest in these funds, it’s worth noting that Fidelity offers a reduced fee of $5 for each purchase of additional shares made through their Recurring Investments feature. However, the standard $100 fee will still apply to all other types of transactions involving these funds.
How to Manage the Impact
For investors who frequently trade Vanguard mutual funds in their Fidelity account, this fee increase could lead to higher costs over time. Here are a few strategies you can consider to minimize the impact:
Explore Alternative Funds
Fidelity offers a wide range of mutual funds with lower or no transaction fees. It might be worthwhile to explore similar funds within Fidelity’s own lineup that could offer comparable performance without the added cost.
Utilize Recurring Investments
By setting up recurring investments, you can take advantage of the reduced $5 fee for additional purchases. This can be particularly beneficial for those who dollar-cost average into their investments.
Fee changes like this one are typically communicated through monthly or quarterly statements. Make it a habit to review these documents to stay informed about any adjustments that might affect your investments.
Move to Fidelity from Vanguard
At the end of the day, keeping more of your investment is most paramount to growing a nest egg. If the performance for index funds and ETFs is similar between brokerage firms, you may want to consider moving your Vanguard account to Fidelity.com, or opening a Vanguard account and invest directly on their platform.