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Fidelity Vs. Vanguard -- Which Is The Best?

Thursday, May 9, 2013 - 12:16 PM
From MarketWatch.com:

Fidelity vs. Vanguard: Which is best? - MarketWatch

"Even though Fidelity is a great company with many successful funds, in my estimation, Vanguard is clearly better for investors who are building a portfolio of basic asset class funds."

I beg to differ from Mr. Paul Merriman's findings and conclusions. 

Long ago, The choice between Fidelity and Vanguard lies in active mnagaement or passive (indexing) management.  I am not clear about how Paul developed his detailed apples-to-apples comparisons.  But now Fidelity has as many index funds (in various categories) as Vanguards while Vanguard also offers some great actively-managed funds.  So this comparison is meanningless IMHO.  Both firms empasize minimizing expense the same way and to the same degree. 

Thus the factors for choosing one over the other only lie in: (1) 401K options: many do not have Vanguard as an option since Fido has the largest piece of the corporate retirement portfolio anywhere.  We, for one, do not have Vanguard options in our 401K.  (2) For indexing: fees are comparable, if not lower, with Fido options, (3) For actively-management style, it is fund dependent; not firm dependent.  For example, I enjoy FLPSX, which is a sready Eddy fund that goes modestly with the rally and downward slightly with the market drops.  By fund choice, I stay with Fido for all our IRA investments. 

I personally think that Mr. Bogle and group are over-selling the expense factor for fund investing.  Both Fido and Vanguard are very cost sensitive.  Vangaurd used to be able to attract investors with cost, but not any more.  They have to win over some of the 401K accounts and they have to win over the actively-managed portfolios (with excellent funds of steady returns; not only with low expense ratio).

In sum, it is to each her/his own at this juncture, according to my best analysis -- No clear winner; only according to each person's own tatse and discernment.  

  
3
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,427
1. Thursday, May 9, 2013 - 12:29 PM
.

Dear 51hh,

Different folks look at different aspects in their brokers.  The comparison done there is useful.  Here are some additional points:

1) Vanguard's UI is very basic, and rather antiquated.  As against that Fido offers great User Interface (needs Java plugin I guess).

2) Fido gives choice to the trader if they want their limit orders "adjusted" for distributions.  This is very useful for bond ETFs.  At Vanguard they do not adjust the orders for distributions which is a significant drawback.

3) At Fido they offer 24/7/365 customer service via phone. At Vanguard it is limited.

4) Fido has no "low-balance" fees. Vanguard charges quite a bit per mutual fund.

... and so on

Yours Truly,
- Anon
6
ytytytyt64 posts since
Feb 28, 2013
Rep Points: 197
2. Thursday, May 9, 2013 - 12:37 PM
Yt,

Great points when I was revising my post.  We are coming with the same conclusion: There is no clear winner; but each has her/his own investment criteria and preferences accordingly.

BR,

51
1
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,427
3. Thursday, May 9, 2013 - 1:13 PM
Dear 51hh,

A few additional points:

5) Fido offers free email/text-message notification after trade is executed.  Vanguard does not.

6) Vanguard offers zero commission trades for all their ETFs, Fido offers this for the single ETF of theirs and a few from iShares.  Starting July Fido will charge what they consider as "short-term" fees for such ETFs.  A significant drawback.

... I like Schwab more than Vanguard and Fido.

Yours Truly,
- Anon
5
ytytytyt64 posts since
Feb 28, 2013
Rep Points: 197
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