Fidelity to end sales charge on sector funds
By Jonathan Burton, CBS.MarketWatch.com
Last Update: 6:48 PM ET Sept. 19, 2003
SAN FRANCISCO (CBS.MW) -- Fidelity Investments will eliminate the 3 percent front-end sales charge, or load, on all 42 of its Select sector mutual funds, the Boston fund giant said Friday.
The fee will be dropped after the market close on Monday. Removing the sales charge on Select Portfolios, which focus on specific sectors and industries, makes all Fidelity retail funds available on a no-load basis for the first time.
Fidelity's Select funds have assets of $18.3 billion. The largest include $2.3 billion Select Technology (FSPTX: news, chart, profile), $2 billion Select Biotechnology (FBIOX: news, chart, profile) and $1.9 billion Select Health Care.
Eric Kobren, executive editor of the Fidelity Insight newsletter, which follows the company's funds, said the move comes in response to competitive challenges from exchange-traded funds.
"It's in reaction to the popularity of ETFs and the ability for investors to play certain sectors of the market without going into an actively managed fund," Kobren said.
ETFs are low-cost index portfolios that trade on major exchanges just like stocks. Investors wanting to focus on a specialized sector, such as technology or energy, can get that exposure through an ETF with greater liquidity and less expense.
Select funds also can be bought and sold throughout the trading day, unlike traditional funds, which are priced once at the market close.
Removing the sales load on Select funds appeals to cost-conscious investors, said Fidelity spokesman John Brockelman.
"If an investor ruled out one of our Select funds because of the sales charge, this gives them reason to take a second look," he added.
Earlier this year, Fidelity eliminated 3 percent loads on several diversified stock funds including Contrafund (FCNTX: news, chart, profile), Fidelity (FFIDX: news, chart, profile), Fidelity Low-Priced Stock (FLPSX: news, chart, profile), Fidelity Magellan (FMAGX: news, chart, profile), Fidelity New Millennium(FMILX: news, chart, profile), and nine international stock funds. |
