Fidelity Investments is one of the largest asset managers globally, offering a wide range of mutual funds, ETFs, and other investment products. As an industry pioneer with over 75 years of history, Fidelity stands out for its low-cost index funds, extensive research capabilities, and strong long-term performance. However, some competitors have emerged in recent years that also offer compelling options for investors. This article analyzes top Fidelity alternatives in 2020 based on fund selection, fees, historical returns, and other factors.
Vanguard beats Fidelity in passive investing with ultra-low fee index funds
Vanguard stands out as a top Fidelity competitor, especially when it comes to passive index investing. With an average expense ratio of just 0.09% across its index funds, Vanguard edged out Fidelity’s average index fund fees of 0.13%. Flagship products like Vanguard 500 Index Fund (VFIAX) also delivered higher 3/5/10 year average annual returns than equivalent Fidelity funds. While losing ground to Vanguard, Fidelity has responded by lowering fees on several existing funds and launching new ultra-low cost index funds like Fidelity Zero Large Cap Index Fund (FNILX) to attract cost-conscious investors.
BlackRock challenges Fidelity with iShares ETFs and Aladdin technology
BlackRock has emerged as a fierce rival to Fidelity in recent years. While best known as the world’s largest ETF provider through its iShares funds, BlackRock also offers strong actively managed mutual funds. Additionally, its Aladdin investment platform and risk management technology is utilized by many institutional investors globally. However, Fidelity maintains an advantage over BlackRock when it comes to mutual fund selection and having its own proprietary research. Retail investors may also perceive Fidelity’s customer service and account management tools to be superior.
T. Rowe Price impresses with top-tier actively managed funds
Baltimore-based T. Rowe Price stands out for its actively managed mutual funds focused on stocks and bonds. With renowned portfolio managers and analysts constantly searching for overvalued/undervalued securities, T. Rowe has scored top percentile rankings for 1/3/5/10 year performance on marquee funds like T. Rowe Price Blue Chip Growth Fund (TRBCX). While more expensive than Fidelity’s index funds, T. Rowe’s active management expertise makes it a great complement to a passive core portfolio. However, Fidelity offers a much more diverse product shelf spanning ETFs, target date funds, sector funds, and more.
While Fidelity continues to be an excellent choice for most investors, competitors like Vanguard, BlackRock, and T. Rowe Price offer unique strengths that could be a better fit depending on investment style and preferences regarding fees, fund selection, and technology. Evaluating performance across various periods is also key to finding potential outperformers.