Fidelity Investments has removed the transaction fee from 45 American Century Investments funds in its FundsNetwork supermarket.
The funds include fixed-income and equity portfolios with value, growth, and international features. The American Century Ultra, Income and Growth, and International Growth funds are also included.
Boston-based Fidelity has expanded its no-transaction-fee program over the past year, adding 221 funds from companies such as J.P. Morgan & Co., which acquired a 45% stake in Kansas City, Mo.-based American Century in January. Of the more than 3,900 funds sold through FundsNetwork, 1,100 can now be purchased without paying a transaction fee to Fidelity.
In adding to its no-transaction-fee program, the company is simply responding to customer demand, said Matthew Sadler, senior vice president of Fidelity FundsNetwork.
"I wish all our funds were available on a no-transaction-fee basis," he said.
The no-transaction-fee program constituted 90% of Fidelity's retail non-proprietary fund sales in August. Funds offered without a transaction fee accounted for $19.4 billion -- of a total $28.4 billion -- in 1999 retail fund sales through August. Observers characterized Fidelity's expanded program as just one component of the competitive picture.
"It's simply a case of doing everything possible in a very competitive world to establish a relationship with customers," said Burton J. Greenwald, a mutual fund consultant in Philadelphia.
Fidelity has "always been playing catch-up, because Schwab introduced the no-transaction-fee supermarket," Mr. Greenwald said. Adding to its no-transaction-fee network, he said, is "all part of a bigger package to capture client relationships," which includes adding services and products.
Geoffrey H. Bobroff, an industry consultant in East Greenwich, R.I., said that though Fidelity is "not happy about not being No. 1" in the fund industry, their focus is different from Schwab's.
"Fidelity as a firm would rather sell mutual funds of its own making," he said.
The FundsNetwork supermarket has more than $140 billion of assets, up from $109 billion at the end of 1998.
