M* Adds to Fee War Buzz
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Tuesday, October 09, 2012

M* Adds to Fee War Buzz

Today's Morningstar Fund Spy column gives a useful check to all the talk about fee wars, by looking at a decision to cut costs that may have ended up hurting Fidelity's overall business.

In 2004, Fidelity tried to undercut Vanguard's 500 Index by dropping the expense ratio on its Fidelity Spartan 500 Index -- a move that Fund Spy columnist Greg Carlson says "made the firm's actively managed funds, many of which are benchmarked against the S&P 500 Index, a little less attractive on the cost front."

So Carlson looks at how each of the fourteen actively managed large-blend Fidelity funds has fared since the 2004 price cut. Some of them have shrunk. But it's not all due to the fee cut, Carlson notes -- a few of the funds "have stunk up the joint."

Take a look at the full list here.

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