As of 4/23/2011, Fidelity had 30 commission-free iShares ETFs. These ETFs cover all U.S. equity sizes and styles (large/mid/small caps and growth/blend/value styles), international equity markets as well as good fixed income ETFs. The missing major asset class is commodities. A plan called Fidelity Commission Efficient ETFs extends this plan by including several additional ETFs (which cost a flat $7.95 commission per trade).
The plan consists of 31 funds. These funds enable participants to gain exposure to five major assets: U.S. Equity, Foreign Equity, REITs, Emerging Market Equity, Fixed Income.
| Asset Class | Ticker | Name |
|---|---|---|
| LARGE VALUE | IWD | iShares Russell 1000 Value Index |
| LARGE BLEND | IVV | iShares S&P 500 Index |
| LARGE BLEND | IWB | iShares Russell 1000 Index |
| LARGE BLEND | IWV | iShares Russell 3000 Index |
| LARGE GROWTH | IVW | iShares S&P 500 Growth Index |
| LARGE GROWTH | IWF | iShares Russell 1000 Growth Index |
| MID-CAP VALUE | IJJ | iShares S&P MidCap 400 Value Index |
| MID-CAP BLEND | IJH | iShares S&P MidCap 400 Index |
| Mid-Cap Growth | IJK | iShares S&P MidCap 400 Growth Index |
| SMALL VALUE | IJS | iShares S&P SmallCap 600 Value Index |
| SMALL VALUE | IWN | iShares Russell 2000 Value Index |
| SMALL BLEND | IJR | iShares S&P SmallCap 600 Index |
| SMALL BLEND | IWM | iShares Russell 2000 Index |
| Small Growth | IJT | iShares S&P SmallCap 600 Growth |
| Small Growth | IWO | iShares Russell 2000 Growth Index |
| WORLD STOCK | ACWI | iShares MSCI ACWI Index |
| Foreign Large Blend | EFA | iShares MSCI EAFE Index |
| Foreign Small/Mid Value | SCZ | iShares MSCI EAFE Small Cap Index |
| DIVERSIFIED EMERGING MKTS | EEM | iShares MSCI Emerging Markets Index |
| Intermediate-Term Bond | AGG | iShares Lehman Aggregate Bond |
| Inflation-Protected Bond | TIP | iShares Lehman TIPS Bond |
| Long-Term Bond | LQD | iShares iBoxx $ Invest Grade Corp Bond |
| Emerging Markets Bond | EMB | iShares JPMorgan USD Emerg Markets Bond |
| Muni National Long | MUB | iShares S&P National Municipal Bond |
| ROOT | CASH | CASH |
| LARGE VALUE | IVE | iShares S&P 500 Value Index |
| LARGE VALUE | DVY | iShares Dow Jones Select Dividend Index |
| Foreign Large Value | IDV | iShares Dow Jones Intl Select Div Idx |
| Foreign Large Blend | ACWX | iShares MSCI ACWI ex US Index |
| High Yield Bond | HYG | iShares iBoxx $ High Yield Corporate Bd |
| REAL ESTATE | IYR | iShares Dow Jones US Real Estate |
| Asset Class | Number of funds |
|---|---|
| Balanced Fund | 0 |
| REITs | 1 |
| Fixed Income | 6 |
| Commodity | 0 |
| Sector Fund | 0 |
| Foreign Equity | 5 |
| Emerging Market Equity | 1 |
| US Equity | 17 |
| Other | 1 |
| Total | 31 |
As of May 17, 2012, this plan investment choice is rated as average based on MyPlanIQ Plan Rating methodology that was designed to measure how effective a plan's available investment funds are. It has the following detailed ratings:
Diversification -- Rated as great (92%)
Fund Quality -- Rated as poor (4%)
Portfolio Building -- Rated as above average (78%)
Overall Rating: average (60%)
The chart and table below show the historical performance of moderate model portfolios employing strategic and tactical asset allocation strategies. For comparison purpose, we also include the moderate model portfolios of a typical five asset SIB (Simpler Is Better) plan. This SIB plan has the following candidate index funds and their ETFs equivalent:
U.S. Equity: SPY or VTI
Foreign Equity: EFA or VEU
REITs: IYR or VNQ or ICF
Emerging Market Equity: EEM or VWO
Fixed Income: AGG or BND
Performance chart (as of May 17, 2012)
(click to enlarge)
Performance table (as of May 17, 2012)
| Portfolio Name | 1Yr AR | 1Yr Sharpe | 3Yr AR | 3Yr Sharpe | 5Yr AR | 5Yr Sharpe |
|---|---|---|---|---|---|---|
| Fidelity Commission-Free ETFs Tactical Asset Allocation Moderate | 1% | 35% | 10% | 94% | 6% | 53% |
| Fidelity Commission-Free ETFs Strategic Asset Allocation Moderate | -2% | 10% | 12% | 105% | 2% | 12% |
| Five Core Asset ETF Benchmark Tactical Asset Allocation Moderate | -1% | 9% | 9% | 82% | 6% | 48% |
| Five Core Asset ETF Benchmark Strategic Asset Allocation Moderate | -6% | -18% | 12% | 83% | 2% | 9% |
Currently High Yield Bond, Fixed Income and Real Estate are doing well. These asset classes are all available to Fidelity Commission-Free ETFs participants.
What to like for Fidelity Commission-Free ETFs:
It has fairly reasonable line ups in fixed income (bonds) that include high yield, emerging market bonds and long- and short-term Treasury bonds. We especially like inflation-protected bonds and believe every portfolio should have this as a candidate fund.
It has all nine U.S. style ETFs (i.e. large, mid and small cap with growth, blend and value styles).
What we don't like is that these ETFs still have too high expense ratios compared with Vanguard ETFs and Schwab ETFs.
Disclaimer: MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.
