, Columnist
Fund Fees Whacked Again in Active-Passive Fight
Fidelity International is cutting fees, but should be doing more to punish underperformance.
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In the battle between active and passive strategies, both sides have a case. Cheerleaders for the passive crowd point to the lower cost of index tracking; proponents of the active approach argue that a good fund manager can deliver superior performance.
Those alleged benchmark-beating returns, however, have proved elusive -- to say the least -- in recent years. So, in an effort to staunch the flow of money seeking the cut-price embrace of the passive model, Fidelity International says it will tie the fees it charges on active equity funds to how well they do compared with their benchmarks.