To put the Fidelity early success into perspective, it still has a long way to go to catch Vanguard. Vanguard's Total Stock Market ETF (VTI) recently became one of only three ETFs to reach the $100-billion asset mark, joining iShares Core S&P 500 ETF (IVV) and State Street Global Advisors' S&P 500 SPDR (SPY). The Vanguard S&P 500 ETF (VOO) has $90 billion in assets. Fidelity's pre-existing S&P 500 index fund has roughly $4 billion in assets. Fidelity's existing total stock market index fund has near-$900 million in assets.
CFRA does not measure monthly assets under management, so Rosenbluth said it is too soon for him to say whether money moved from a Schwab S&P 500 fund or another index fund, though as more data becomes available it may support the asset-gathering benefits of launching a zero-fee fund.
In the past month, the Vanguard S&P 500 ETF and iShares Core S&P 500 ETF took in close to $9 billion, with the majority going to iShares, at $6.6 billion.
Vanguard, Schwab and BlackRock's iShares have been waging a battle for low-fee supremacy in the ETF and index fund space, though Fidelity is the only to offer an index fund with no management fee. Some fund experts have argued that the word "zero" doesn't have a positive marketing connotation when it comes to investments and that might limit appeal, but so far, it seems the intense fee war in the fund world has reached the point where "zero" is a selling point.
Vanguard, Schwab and iShares already offer broad stock index funds and ETFs with management fees at less than 10 basis points (0.10 percent), in several cases less than 5 basis points (0.05 percent). Schwab had been the low-cost leader before Fidelity with its total stock market index fund and S&P 500 index fund offered at a fee of 0.03 percent. Fidelity lowered the fees on its existing broad U.S. stock index funds to 0.015 percent.