One of the biggest financial services companies in the world is Fidelity Investments. A pioneer of mutual funds in the United States, Fidelity was established in 1946. With more than 300 mutual funds available, the business is currently one of the leading players in the sector.
For those who take part in corporate retirement plans like a 401(k), we have put together this hand-curated selection of the top Fidelity mutual funds to assist them strengthen their portfolios. We have chosen Fidelity funds with distinct investing philosophies to meet various objectives, fair costs, and a long history of performance.
Fidelity Mutual Funds’ Best Investments
1. Best Overall: Fidelity Total Market Index Fund (FSKAX)
Fidelity’s Total Market Index Fund, which trades under the symbol FSKAX, is one of the best basic funds available. The Dow Jones U.S. Total Stock Market Index, a benchmark made up of the 5,000 biggest American companies, is where the fund invests 80% of its assets.
The fund currently owns 3,405 common equities, 20% of which belong to tech firms. With concentrations of 14.5% and 13.7%, respectively, the next two sectors are healthcare and finance. However, the fund’s pricing is its best asset. Investors will only spend $1.15 in expenses on a $10,000 investment with a net expense ratio of 0.015%. Fidelity started FSKAX in 1997 and has since developed it into a key holding in long-term portfolios. It offers comprehensive U.S. market exposure for a fraction of the cost of its rivals.
2. Best for Domestic Equity: Fidelity 500 Index Fund (FXAIX)
Fidelity 500 Index Fund (FXAIX) FXAIX has returns over 1, 3, and 5 years of 50.48%, 18.69%, and 14.25%, respectively. With low fees and minimum investments, it is a great fund for new investors.
FXAIX has returned 11.96% over the past ten years, almost exactly matching the 11.97% return of the S&P 500. The fund has returned 10.49% from inception in 1988 compared to 10.64% for the S&P 500, thus tracking errors have been low during the past 30 years. The Fidelity 500 Index Fund is a wonderful place to start for any investment account because it has no minimums, minimal costs, and a history of matching its benchmark.
3. Best International Fund: Fidelity International Index Fund (FSPSX)
The Foreign Index Fund is not one of the expensive international mutual funds offered by Fidelity. The expense ratio for the fund, which invests exclusively in developed markets, is a modest 0.045% ($4.50 on a $10,000 investment). The index that the fund follows is the MSCI Europe, Australasia, and Far East Index, which was created to provide investors with unmatched access to markets outside of North America.
As long as it’s financially practicable, the fund tries to hold every security in the index at its market weight. The nations with the highest stock concentration in the fund are Japan, the UK, and France. The top three holdings are Nestle, Novartis, and HSBC, and more than 63% of the stocks purchased are from European nations. For investors wishing to increase their exposure to developed markets, FSPSX is a fantastic investment.
4. Best for Fixed Income: Fidelity U.S. Bond Index Fund (FXNAX)
Not a stock market enthusiast? For risk-averse investors, Fidelity offers a wide range of fixed income options, with the Fidelity U.S. Bond Index Fund being the finest of the lot. With the Bloomberg Barclays U.S. Aggregate Bond Index serving as its benchmark, the fund seeks to give investors exposure to a variety of bonds from various issuers and sectors.
The fund has a lower expense ratio (0.025%) than Vanguard’s Total Bond Market Index Fund (0.04%). Just over 40% of the holdings in the fund are U.S. Treasuries, while 23% and 27%, respectively, are corporate and MBS pass-through bonds. Only 10% of the bond holdings in the portfolio are rated below A. This fund is a terrific place to start for investors wishing to get exposure to U.S. bond market because there is no minimum investment requirement.
5. Best Actively-Managed Fund: The Contrafund (FCNTX)
Since few managers have consistently outperformed the market over time, we like to recommend index funds in these articles. However, if you insist on paying a premium for a manager, go with William Danoff and the Contrafund.
Danoff has solely covered the last 20 years of Contrafund’s trading history, which spans more than 50 years. You would have around $37,000 now if you had put $10,000 into Contrafund ten years ago and left it alone. $10,000 invested in the S&P 500 during the same period would have generated nearly $34,000. Contrafund has, however, trailed the S&P for the past two years; Danoff’s charm may be waning. Even so, the fund’s expense ratio of 0.74% is reasonable, and since Peter Lynch left, Danoff’s managers have outperformed Magellan’s.
6. Best New Fund: Fidelity ZERO Total Market Index (FZROX)
With the introduction of its ZERO mutual fund, a collection of assets with zero expense ratios, Fidelity has ventured into uncharted territory. The Fidelity ZERO Total Market Index fund, then, has a net cost ratio of 0.00%.
The fund started trading on August 8 of this year, therefore there isn’t much historical data to compare on a chart. The fund initially appears to be a typical stock market index. It owns more than 2,500 common stocks from large-, mid-, and small-cap American corporations and tracks the Fidelity U.S. Total Investable Market Index. Fidelity is able to save money by forgoing fees from index producers like Standard and Poor or Dow Jones by using a proprietary stock index.
For Fidelity, zero expense funds could be a game-changer. If Fidelity’s internal indexes can equal the main ones, a zero-cost fund may completely change the market because even the tiniest fees can cost thousands of dollars over a 30-year investment horizon.