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Fund Spy

Morningstar Fund Spy

That'll Cost Ya
If one of my funds suffered a 50% loss, I wouldn't expect it to offer me a rebate, or even an apology. But I wouldn't expect the fund to charge me extra, either. Yet that's what happened to a shareholder in Fidelity Select Energy Service, who spread the word on our Socialize boards. He had invested $3,500 in that fund, but its woeful performance turned that amount into $1,600. Fidelity then slapped him with the $12 maintenance fee it applies to accounts under $2,500.

There's nothing wrong with these maintenance fees in principle: It's hard for a fund company to profit from tiny accounts. Yet slapping the fee on a shareholder who was comfortably above the line until his fund tanked seems unreasonable at best. Vanguard, which also imposes maintenance fees on small accounts, says it waives the fee in such circumstances. But Fidelity confirmed to us that it does not offer waivers. If you're below the minimum, you pay. It doesn't matter how you got there.

In a hard-charging bull market, it's possible that this scenario simply didn't happen too often at Fidelity, and thus its harsh "no waiver" stance came about more by default than from a high-level decision to impose its strict rule no matter what. If so, here's hoping that Fidelity will change its mind.