Best Fidelity Mutual Funds
Best Fidelity Mutual Funds
Exchange-traded funds are all the rage these days. As of March 3, the universe of U.S.-listed ETFs surpassed 4,000 options, with total assets under management hitting $10 trillion by the end of the fourth quarter of 2024, according to consulting and accounting firm EY.
But while ETFs may dominate the headlines, established asset managers like Fidelity Investments continue to make a strong case for mutual funds.
Fidelity is no slouch in the ETF space, with 76 ETFs currently on offer. However, that lineup pales in comparison to the firm's mutual fund presence, which boasts a whopping 312 funds – more than four times as many.
So why would an investor choose a mutual fund in today's commission-free brokerage environment? For one, mutual funds settle transactions at a single price at the end of the trading day, which can make buying and selling less stressful.
Many of Fidelity's mutual funds also come with investor-friendly features, including no commissions on Fidelity's brokerage platform, long performance histories and transparent portfolio metrics.
"Savvy investors understand the importance of keeping your costs low and your options open, and Fidelity funds have become popular because they offer just that," says Andrew Latham, a certified financial planner and director of content at SuperMoney.com. "With no sales loads, low fees and no minimum investment requirements, it's easier to start investing without breaking the bank."
Here are seven of the best Fidelity mutual funds to buy and hold:
Fund
Fidelity Total Market Index Fund (ticker: FSKAX)
Fidelity 500 Index Fund (FXAIX)
Fidelity Zero Total Market Index Fund (FZROX)
Fidelity Zero International Index Fund (FZILX)
Fidelity Magellan Fund (FMAGX)
Fidelity Blue Chip Growth Fund (FBGRX)
Fidelity Contrafund (FCNTX)
But while ETFs may dominate the headlines, established asset managers like Fidelity Investments continue to make a strong case for mutual funds.
Fidelity is no slouch in the ETF space, with 76 ETFs currently on offer. However, that lineup pales in comparison to the firm's mutual fund presence, which boasts a whopping 312 funds – more than four times as many.
So why would an investor choose a mutual fund in today's commission-free brokerage environment? For one, mutual funds settle transactions at a single price at the end of the trading day, which can make buying and selling less stressful.
Many of Fidelity's mutual funds also come with investor-friendly features, including no commissions on Fidelity's brokerage platform, long performance histories and transparent portfolio metrics.
"Savvy investors understand the importance of keeping your costs low and your options open, and Fidelity funds have become popular because they offer just that," says Andrew Latham, a certified financial planner and director of content at SuperMoney.com. "With no sales loads, low fees and no minimum investment requirements, it's easier to start investing without breaking the bank."
Here are seven of the best Fidelity mutual funds to buy and hold:
Fund
Fidelity Total Market Index Fund (ticker: FSKAX)
Fidelity 500 Index Fund (FXAIX)
Fidelity Zero Total Market Index Fund (FZROX)
Fidelity Zero International Index Fund (FZILX)
Fidelity Magellan Fund (FMAGX)
Fidelity Blue Chip Growth Fund (FBGRX)
Fidelity Contrafund (FCNTX)
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Fidelity Total Market Index Fund (FSKAX)
"While it truly depends on each individual investor's specific goals and objectives, I typically advocate for index funds in the accumulation phase, as these give great broad-market exposure with lower fees than actively managed funds," says Wes Moss, managing partner and chief investment strategist at Capital Investment Advisors. Fidelity has many well-capitalized index funds with long track records.
A great example is FSKAX, which tracks over 3,800 small-, mid- and large-cap stocks represented by the Dow Jones U.S. Total Stock Market Index. This Fidelity fund charges a very low 0.015% expense ratio. For a $10,000 investment, this works out to just $1.50 in fees annually. It is also fairly tax efficient thanks to a low 3% turnover rate, which minimizes the frequency and size of capital gains distributions.
"While it truly depends on each individual investor's specific goals and objectives, I typically advocate for index funds in the accumulation phase, as these give great broad-market exposure with lower fees than actively managed funds," says Wes Moss, managing partner and chief investment strategist at Capital Investment Advisors. Fidelity has many well-capitalized index funds with long track records.
A great example is FSKAX, which tracks over 3,800 small-, mid- and large-cap stocks represented by the Dow Jones U.S. Total Stock Market Index. This Fidelity fund charges a very low 0.015% expense ratio. For a $10,000 investment, this works out to just $1.50 in fees annually. It is also fairly tax efficient thanks to a low 3% turnover rate, which minimizes the frequency and size of capital gains distributions.
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Fidelity 500 Index Fund (FXAIX)
"Personally, I like Fidelity mutual funds because they offer a variety of investment options, have low fees and are backed by a reputable company with a long history of success in the industry," Latham says. For example, investors can seamlessly swap between FSKAX and FXAIX for U.S. equity exposure. FXAIX charges an identical 0.015% expense ratio but tracks the popular S&P 500 index instead.
Despite tracking different index benchmarks, FXAIX and FSKAX have similar top holdings and historical performance. That's because both funds are market-capitalization-weighted, meaning larger companies make up a bigger share of the portfolio. While FXAIX lacks the thousands of small- and mid-cap stocks found in FSKAX, this methodology makes the two funds virtually interchangeable for most investors.
"Personally, I like Fidelity mutual funds because they offer a variety of investment options, have low fees and are backed by a reputable company with a long history of success in the industry," Latham says. For example, investors can seamlessly swap between FSKAX and FXAIX for U.S. equity exposure. FXAIX charges an identical 0.015% expense ratio but tracks the popular S&P 500 index instead.
Despite tracking different index benchmarks, FXAIX and FSKAX have similar top holdings and historical performance. That's because both funds are market-capitalization-weighted, meaning larger companies make up a bigger share of the portfolio. While FXAIX lacks the thousands of small- and mid-cap stocks found in FSKAX, this methodology makes the two funds virtually interchangeable for most investors.
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Fidelity Zero Total Market Index Fund (FZROX)
"Fidelity introduced zero-expense-ratio index mutual funds and also offered zero-minimum-investment mutual funds, no minimums to open an account and no account fees for retail brokerage accounts," Moss says. The Fidelity "Zero" fund lineup achieves this by lending securities to earn income, which offsets costs. It also uses proprietary Fidelity indexes, which eliminate licensing fees.
FZROX is the zero-expense-ratio alternative to FSKAX. This fund tracks the Fidelity U.S. Total Investable Market Index, which is highly diversified with over 2,500 small-, mid- and large-cap U.S. equities. Like FSKAX, FZROX is also market-cap weighted and has similar top holdings. Like most broad-market index funds, FZROX is also fairly tax efficient thanks to a low 2% portfolio turnover rate.
"Fidelity introduced zero-expense-ratio index mutual funds and also offered zero-minimum-investment mutual funds, no minimums to open an account and no account fees for retail brokerage accounts," Moss says. The Fidelity "Zero" fund lineup achieves this by lending securities to earn income, which offsets costs. It also uses proprietary Fidelity indexes, which eliminate licensing fees.
FZROX is the zero-expense-ratio alternative to FSKAX. This fund tracks the Fidelity U.S. Total Investable Market Index, which is highly diversified with over 2,500 small-, mid- and large-cap U.S. equities. Like FSKAX, FZROX is also market-cap weighted and has similar top holdings. Like most broad-market index funds, FZROX is also fairly tax efficient thanks to a low 2% portfolio turnover rate.
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Fidelity Zero International Index Fund (FZILX)
"International investing can be a great diversifier for investors who are too heavily concentrated in U.S. stocks," says Henry Yoshida, CEO and co-founder of Rocket Dollar. "With FZILX, you can invest internationally at zero cost – this is a win-win for any serious long-term investor." By combining FZROX and FZILX, investors can access a globally diversified equity portfolio at virtually zero cost.
This Fidelity fund tracks the Fidelity Global ex U.S. Index, which holds over 2,200 market-cap-weighted international equities. It is diversified across both developed and emerging markets. The former includes countries like Japan, Switzerland, the U.K. and Germany, while the latter includes China, India, Brazil and more. Tax efficiency remains decent thanks to a low 5% turnover rate.
"International investing can be a great diversifier for investors who are too heavily concentrated in U.S. stocks," says Henry Yoshida, CEO and co-founder of Rocket Dollar. "With FZILX, you can invest internationally at zero cost – this is a win-win for any serious long-term investor." By combining FZROX and FZILX, investors can access a globally diversified equity portfolio at virtually zero cost.
This Fidelity fund tracks the Fidelity Global ex U.S. Index, which holds over 2,200 market-cap-weighted international equities. It is diversified across both developed and emerging markets. The former includes countries like Japan, Switzerland, the U.K. and Germany, while the latter includes China, India, Brazil and more. Tax efficiency remains decent thanks to a low 5% turnover rate.
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Fidelity Magellan Fund (FMAGX)
Fidelity's mutual fund lineup isn't limited to passive index tracking options. It also features many storied actively managed funds, with FMAGX being a great example. This fund was once managed by the late Peter Lynch, whose "growth at a reasonable price," or GARP, strategy led to strong outperformance. However, after Lynch stepped down, the fund's performance faltered under new management.
However, FMAGX has seen a resurgence in recent years. Sammy Simnegar took over in February 2019, and over the trailing three years, FMAGX has outperformed the S&P 500, returning an annualized 13.1% versus 12.6%. In addition, Fidelity has lowered the expense ratio of FMAGX down to 0.47%. However, this fund does have a high 39% turnover rate, which makes it fairly tax inefficient.
Fidelity's mutual fund lineup isn't limited to passive index tracking options. It also features many storied actively managed funds, with FMAGX being a great example. This fund was once managed by the late Peter Lynch, whose "growth at a reasonable price," or GARP, strategy led to strong outperformance. However, after Lynch stepped down, the fund's performance faltered under new management.
However, FMAGX has seen a resurgence in recent years. Sammy Simnegar took over in February 2019, and over the trailing three years, FMAGX has outperformed the S&P 500, returning an annualized 13.1% versus 12.6%. In addition, Fidelity has lowered the expense ratio of FMAGX down to 0.47%. However, this fund does have a high 39% turnover rate, which makes it fairly tax inefficient.
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Fidelity Blue Chip Growth Fund (FBGRX)
FBGRX is another famous Fidelity active mutual fund. Launched in December 1987, this fund tracks blue-chip stocks, which Fidelity defines as companies that are "well-known, well-established and well-capitalized." With a growth investing mandate, the current portfolio of 403 holdings is strongly tilted toward the technology sector, with all the "Magnificent Seven" stocks featured as top holdings.
FBGRX's current portfolio manager, Sonu Kalra, has been in charge since July 2009. Under his management, FBGRX has consistently outperformed the Russell 1000 growth index over the trailing-10-year and trailing-five-year periods. As with FMAGX, Fidelity also lowered FBGRX's expense ratio to 0.47%. However, it does pay high capital gains distributions due to a 22% turnover rate, making it less tax efficient.
FBGRX is another famous Fidelity active mutual fund. Launched in December 1987, this fund tracks blue-chip stocks, which Fidelity defines as companies that are "well-known, well-established and well-capitalized." With a growth investing mandate, the current portfolio of 403 holdings is strongly tilted toward the technology sector, with all the "Magnificent Seven" stocks featured as top holdings.
FBGRX's current portfolio manager, Sonu Kalra, has been in charge since July 2009. Under his management, FBGRX has consistently outperformed the Russell 1000 growth index over the trailing-10-year and trailing-five-year periods. As with FMAGX, Fidelity also lowered FBGRX's expense ratio to 0.47%. However, it does pay high capital gains distributions due to a 22% turnover rate, making it less tax efficient.
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Fidelity Contrafund (FCNTX)
Don't let the name fool you – FCNTX no longer embodies a contrarian investment style. Under the management of William Danoff since September 1990, this fund has evolved into a large-cap growth fund. Currently, the fund's top holdings are dominated by Meta Platforms Inc. (META), Berkshire Hathaway Inc. (BRK.B), Nvidia Corp. (NVDA), Amazon.com Inc. (AMZN) and Microsoft Corp. (MSFT).
FCNTX's track record is impressive, having outperformed the S&P 500 over trailing 10-, five-, three- and one-year periods. However, Danoff's long tenure raises questions about his inevitable retirement, as there is no guarantee his replacement will experience the same success. FCNTX charges a 0.39% expense ratio and has an 18% turnover rate, better than both FMAGX and FBGRX.
Don't let the name fool you – FCNTX no longer embodies a contrarian investment style. Under the management of William Danoff since September 1990, this fund has evolved into a large-cap growth fund. Currently, the fund's top holdings are dominated by Meta Platforms Inc. (META), Berkshire Hathaway Inc. (BRK.B), Nvidia Corp. (NVDA), Amazon.com Inc. (AMZN) and Microsoft Corp. (MSFT).
FCNTX's track record is impressive, having outperformed the S&P 500 over trailing 10-, five-, three- and one-year periods. However, Danoff's long tenure raises questions about his inevitable retirement, as there is no guarantee his replacement will experience the same success. FCNTX charges a 0.39% expense ratio and has an 18% turnover rate, better than both FMAGX and FBGRX.