Fidelity’s $100 ETF fee shock
43sThe immediate 10% loss on a $1000 investment is a shocking, relatable pain point that grabs attention.
▶ Play ClipAI Summary
Fidelity is introducing a $100 service fee on over 120 ETFs, expanding from an initial 27, after issuers refused to pay Fidelity for fund support. This fee means investors lose 10% on a $1,000 purchase, but major index funds like VTI, QQQ, VOO, and SCHD are unaffected, and other brokerages like Schwab, Robinhood, and Vanguard do not impose this fee.
Chapters
[00:02]
Fee Expansion
Fidelity now charges a $100 service fee on over 120 ETFs, up from 27, affecting purchases of these funds.
[00:15]
Immediate Impact
Buying $1,000 worth of an affected ETF results in an instant 10% loss due to the fee.
[00:28]
Reason for Fee
In March, Fidelity notified ETF issuers they must pay a fee for fund support; issuers who refused have their ETFs affected.
[00:42]
Affected Funds
Roundhill has 40 affected funds, including QDTE, a known covered call fund.
[00:55]
Unaffected Funds
Major index funds like VTI, QQQ, VOO, SCHD, and other market-tracking ETFs are not affected.
[00:55]
Other Brokerages
Investors using Schwab, Robinhood, or Vanguard do not face these $100 fees.
Fidelity's new $100 fee on over 120 ETFs, driven by issuer non-payment, creates a significant cost for investors, but those using other brokerages or holding major index funds are largely unaffected.
Mentioned in this Video
Study Flashcards (6)
How many ETFs are affected by Fidelity's new $100 fee?
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How many ETFs are affected by Fidelity's new $100 fee?
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Over 120 ETFs.
00:02
What is the immediate loss when buying $1,000 of an affected ETF?
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What is the immediate loss when buying $1,000 of an affected ETF?
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10% of the investment, or $100.
00:15
Why did Fidelity introduce the $100 fee?
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Why did Fidelity introduce the $100 fee?
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Because ETF issuers refused to pay Fidelity a fee for fund support.
00:28
Which fund is mentioned as an infamous covered call fund affected by the fee?
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Which fund is mentioned as an infamous covered call fund affected by the fee?
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QDTE by Roundhill.
00:42
Are major index funds like VTI and QQQ affected?
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Are major index funds like VTI and QQQ affected?
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No, they are not affected.
00:55
Which brokerages do not charge the $100 fee?
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Which brokerages do not charge the $100 fee?
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Schwab, Robinhood, and Vanguard.
00:55
💡 Key Takeaways
📊
Fee Expansion to 120+ ETFs
Highlights a significant change in Fidelity's fee structure affecting a wide range of funds.
00:02
📊
10% Instant Loss
Quantifies the immediate financial impact, making the fee's severity clear.
00:15
💡
Reason: Issuer Non-Payment
Explains the underlying cause, showing it's a business decision rather than a regulatory change.
00:28
📊
Major Index Funds Unaffected
Reassures investors that popular passive funds are safe, limiting the fee's reach.
00:55Full Transcript
[00:02] will now come with a $100 service fee every time you buy one of these funds. So, the list of affected funds expanded from 27 ETFs to more than 120. I'll put a full list in the description, but it means that if you buy a thousand dollars
[00:15] worth of one of these ETFs, you will instantly lose 10% of your investment this is happening because in March, Fidelity sent a notice to these ETF issuers that they would have to pay them a fee in order to have their funds
[00:28] supported on Fidelity. The issuers that have refused have some of their ETFs because they don't pay Fidelity, Fidelity is passing those costs on to these ETFs are probably the ones by Roundhill. They have 40 affected funds
[00:42] including QDTE, one of the most infamous covered call funds. But, your favorite covered call funds. But, your favorite ETFs like VTI, QQQ, VOO, SCHD, or any big index funds or ETFs that track the market index, these are not affected.
[00:55] probably worth checking if these ETFs are going to affect you, but if you invest on other brokerages like Schwab, Robinhood, and Vanguard, there are no Robinhood, and Vanguard, there are no $100 fees for these ETFs.
