Everyone likes a sale. Every year fund expense ratios go up and down, but we tend to miss those changes as we focus on returns. Let’s look at some funds that just got more attractive thanks to expense ratio cuts.

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Performance fees have largely gone out of favor in the fund world, but Fidelity has kept them. Essentially, they are symmetrical increases or decreases to a fund’s expense ratio based on three-year performance versus an index. So, the bad news is that a fee cut means a fund has been in a bit of a slump, but with good fundamentals and a lower expense ratio, there’s reason for optimism.

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Also, some of Fidelity’s growth funds have posted strong performance relative to peers. It’s just that the Russell 1000 Growth Index has been particularly hard to beat as the biggest names have been the top performers.

Fidelity Blue Chip Growth FBGRX, which has a Morningstar Medalist Rating of Silver, is a very aggressive fund whose expense ratio was cut 22 basis points to 0.47%. That’s an awfully nice price for Sonu Kalra’s fund. He looks for fast-growing companies that have big upside. Nvidia NVDA, Apple AAPL, and Microsoft MSFT top the portfolio. When Big Tech is in favor, the fund roars, and when it is in a correction, the fund hurts. It’s the 2022 correction when Fidelity Blue Chip Growth lost 38% that has the fund on the downside of its performance fee right now.

Fidelity Value Discovery FVDFX also had a 22-basis-point fee cut, but that’s where the similarity ends. This Silver-rated value fund is on the cautious side, so its sluggish performance is happening right now as a 13% return has it in the bottom decile. Manager Sean Gavin aims for less volatility than the Russell 1000 Value, and he generally succeeds with a diffuse and relatively cheap portfolio.

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Silver-rated Fidelity Growth Discovery FDSVX lowered fees by 17 basis points to just 0.66%. Asher Anolic and Jason Weiner run a strategy that’s a little more risk-averse than Kalra’s. The fund’s top holdings have lower weights, and valuations are a little more moderate. The managers track gross margins closely because their research shows that they reveal durable competitive advantages. They are also known for going their own way rather than leaning too heavily on analysts. So, this fund probably would work as a core holding for more investors than Fidelity Blue Chip Growth.

T. Rowe Price has made major cuts to its municipal-bond funds’ expense ratios to become more competitive in a lower-return asset class. T. Rowe Price Tax-Free Short-Intermediate PRFSX reduced fees by 14 basis points to 0.38%, T. Rowe Price Tax-Free Income PRTAX by 12 basis points to 0.41%, and T. Rowe Price Summit Municipal Intermediate PRSMX by 11 basis points to 0.40%. T. Rowe Price Tax-Free High Yield PRFHX cut fees by 4 basis points to 0.63%. We’re fans of the funds and give them each Above Average ratings for the People and Process Pillars, except for Tax-Free High Yield, which gets a High Process rating. On the downside, we did lower the People ratings from High because of elevated personnel turnover. T. Rowe Price Tax-Free High Yield is now rated Silver, but the other funds’ ratings fell to Neutral despite the fee cut.

Bronze-rated TCW Core Fixed Income TGFNX is also looking more attractive. The fund trimmed its expense ratio by 7 basis points to 0.63%. Our analysts like the mix of flexibility and discipline that has led to pleasing results over time. Although the firm is undergoing a big succession shift as the founders retire, we like the strong team that remains. The fund’s performance slump in recent years is largely due to being on the long side of duration when interest rates spiked in 2022.

This article first appeared in the December 2024 issue of Morningstar FundInvestor. Download a complimentary copy of FundInvestor by visiting this website.