Fidelity Takes On Vanguard in TDF Space, Matching Its Lower Minimums

The exception is the investor share class of the Fidelity Freedom Index Income Funds, whose 12 basis-point expense ratio is the same as its Vanguard counterpart. 

All investor share classes of all Fidelity Freedom Index Funds charge 12 basis points. The institutional premium share class of the funds have an eight basis-point fee while the premier share class of the funds, which has a $2 billion minimum, has a net expense fee of six basis points. The average expense ratio of Vanguard's index-based institutional target retirement funds is nine basis points.

The 95% reduction in the investment minimum for the institutional premium class of Fidelity's Freedom Index Funds provides "an even more compelling value proposition" for its millions of customers, including individual investors, workplace retirement plan sponsors and participants and financial advisors, said Daniel Terio, Fidelity's vice president of target date products, in a statement.

Fidelity's Freedom Index Series had the biggest inflows of the top 10 target date mutual fund series in 2020, collecting $15.6 billion, or 25% more than in 2019, according to Morningstar. Vanguard's Target Retirement System collected $2.7 billion in 2020, 92% less than the year before, dropping it to sixth place from first place in 2019.