Fidelity Investments is a company that provides a variety of financial services and has its headquarters in Boston, Massachusetts. It is one of the largest asset managers in the world, and its actively managed, no-load mutual funds have made it one of the most well-known in the industry. In addition to this, it provides monetary assistance for retirement programs such as 401(k)s and individual retirement accounts (IRAs) (IRAs). Fidelity provides dozens of low-cost mutual funds that are performing exceptionally well across a wide variety of sectors. Although it is perhaps most well-known for actively managed funds, it also provides some of the most cost-effective index funds that are currently on the market. As a result, it is simple to understand why it is considered to be one of the greatest no-load mutual fund businesses in the entire financial universe at the present time. A selection of the most valuable funds that Fidelity has to offer is provided in the following table.
Varieties of Fidelity Funds
Because Fidelity provides its customers with access to a large number of high-quality mutual funds, it can be difficult to select the funds that are in your best interest. This list of the top funds is going to be broken down into three different categories: the best actively managed funds, the best index funds, and the best-balanced funds. The following is a general guideline for selecting the most suitable funds: Actively Managed Funds: Typically, the performance of these funds over the long run is superior to that of the index that the fund follows. The managers have been with the firm for at least five years and work hard to improve the funds' performance relative to the index or market that they are designed to replicate. Index Funds: These funds have low expense ratios and focus on a variety of indexes to which they are benchmarked. Balanced funds are mutual funds that hold a variety of investments, including stocks, bonds, and other debt securities, in order to strike a healthy balance between risk and growth. Balanced funds can be beneficial for a variety of clients, boast an impressive track record, and provide investors with portfolio diversification.Mutual Fund Alternative
To increase your level of diversification, it is not necessary to invest solely in mutual funds. Active exchange-traded funds (ETFs) give investors the opportunity to profit from the investment methods of actively managed funds while also providing a host of other advantages. Reduced tax burdens and the ability to trade on flexible schedules are two of the most enticing advantages. It's possible that exchange-traded funds, sometimes known as ETFs, can offer better tax efficiency than mutual funds. When compared to mutual funds with identical objectives, ETFs often have a lower incidence of taxable events. The managers of mutual funds do something called "rebalancing" on a regular basis. This entails purchasing and then selling assets in order to maintain returns at the level specified by the fund strategy. On the other hand, an exchange-traded fund manager is responsible for managing the fund's capital inflows and outflows. This is accomplished by establishing or redeeming "creation units," which are essentially asset baskets that come close to representing the ETF's exposure. The end effect of this procedure is a reduction in the number of events that result in taxable capital gains. Because shares of an ETF can be bought and sold on exchanges during regular business hours, you can trade in accordance with your own timetable while using an ETF. At the close of each trading day, investors are the only ones who can buy or sell mutual funds.Funds That Are Managed Actively
Actively managed funds are portfolios of investment securities that are systematically bought and sold by the fund management, typically with the unspoken objective of outperforming an index. For instance, the goal of an actively managed large-cap stock mutual fund is to achieve returns that are superior to those of the S&P 500 Index in the majority of calendar years. Therefore, it would have returns over the long run that are superior to those of the index. Listed below are four actively managed funds that have outperformed their respective benchmark indexes when measured by annualized returns over a period of five or ten years:Contrafund (FCNTX)
For more than three decades, Will Danoff has been responsible for managing this large-cap stock index fund. Throughout the entirety of the era, Contrafund has demonstrated outstanding performance. A remarkable achievement in the world of mutual funds, FCNTX has delivered an annualized return of approximately 13 percent on average from the fund's debut in 1990. The return on average for the stock market is somewhere around 10 percent. An excellent option would be any fund that achieves a return that is more than this over time. Both growth equities and value stocks make up the fund's portfolio of investments. The vast majority of the holdings are large-cap equities, although there are also some mid-cap stocks included. The expenditure ratio of FCNTX comes in at a respectable 0.86 percent, and there is no required minimum investment to get started.Income Distribution and Investment Strategy (FSDIX)
The majority of this fund's assets are held in value equities, which are expected to generate dividends for the fund's investors. The increase of the fund's assets is also one of its goals. For this reason, FSDIX may be an excellent option for retirees who are interested in purchasing funds for the goal of generating an income. Potential investors who are interested in the long-term growth of capital may also find it to their liking. There is no minimum initial investment required to purchase shares in FSDIX, and the expense ratio is 0.70 percent.Choose Your Biotechnology Investment Portfolio (FBIOX)
This is a health sector fund, and its primary investment strategy is to acquire stock in organizations operating within the health sector. In this particular instance, the area of biotechnology will serve as the fund's primary focus. Biotechnology and health care equities have the potential for enormous growth, but they also have the potential for brief periods of significant falls. As a result, FBIOX qualifies as an aggressive stock fund, which means that it is best suited for long-term investors who are OK with experiencing both gains and losses. There is no minimum amount required to invest, and the expense ratio for FBIOX is currently 0.72 percent.Puritan Fund (FPURX)
This five-star fund targets both income and growth while exposing itself to a manageable level of risk. Stocks and other forms of equity account for approximately sixty percent of the fund's total assets. The remaining holdings are comprised of various bonds and debt securities. According to the fund's manager, Daniel E. Kelly, the majority of the fund's decisions are based on basic and quantitative analysis. In the equity section, it looks for securities that the market has mispriced and tries to buy at a discount. The expense ratio of FPURX is 0.52%, and there is no minimum investment required to purchase shares.Index Funds
Some of the most cost-effective index funds available can be found at Fidelity Investments. We are going to focus on three of the company's passively managed options despite the fact that they have more than thirty index funds available.Fidelity 500 Index Fund (FXAIX)
FXAIX, which was originally known as FUSVX, is widely regarded as one of the most effective funds for tracking the S&P 500 Index currently available. It boasts one of the most affordable expense ratios (0.015 percent), making it competitive with other mutual funds across the board. There are around 5,000 different indices that funds might choose to track. The Dow Jones Industrial Average, the Standard & Poor's 500, and the Wilshire 5000 are the three that receive the most attention from investors. FXAIX is an excellent core holding for a long-term investment portfolio of funds because of its extensive exposure to more than 500 of the top stocks in the United States. There is no required minimum amount to invest initially.U.S. Bond Index Fund (FXNAX)
You should think about purchasing shares of FXNAX if you are searching for an index fund that is effective at providing coverage of the United States bond market (formerly FBIDX). The Bloomberg Capital U.S. Aggregate Bond Index is the one that FXNAX follows. FXNAX is a diverse holding that covers the bond market and provides its shareholders with access to thousands of bonds by virtue of the fact that FXNAX is a bond index fund. There is no requirement for a minimum first purchase when investing in FXNAX, and the expense ratio is only 0.025 percent.Enhanced Index Fund for Mid-Cap Companies (FMEIX)
FMEIX is one of the finest funds you can purchase in this area if you are looking for a mutual fund that provides exposure to mid-cap equities, and it is one of the top products you can buy overall in this category. This fund mirrors the performance of the Russell Mid Cap Index, so investors in FMEIX will have access to a diverse group of around 300 mid-cap stocks. Large-cap companies have a greater potential for long-term growth, but mid-cap stocks have the potential for bigger short-term losses. Because of this, FMEIX is considered an aggressive holding, and the best investors for it are those that invest for the long term and have a medium to high tolerance for risk. There is no requirement for a minimum initial purchase while trading on the FMEIX, which has an expense ratio of 0.59 percent.Balanced Funds
Balanced funds are mutual funds that invest an equal amount of money in cash, bonds, and equities. Investors who wish to put their money into just one fund or who are looking for a stable base holding to construct their portfolio around might consider balanced funds as an option.A Fund That Is Balanced (FBALX)
Because this is a moderate allocation fund, it ensures that owners of FBALX will receive an asset allocation with a medium level of risk, consisting of around two-thirds stocks and one-third bonds. This combination carries a lower level of risk than a portfolio that is composed entirely of stocks. On the other hand, the returns over the long run have historically been very close to what you would anticipate for a fund that only invests in stocks. Since its beginning more than three decades ago, FBALX has generated an annualized rate of return that is very close to 9.7 percent on average. FBALX offers an expenditure ratio of 0.52%, and there is no requirement for a minimum purchase to open an account.Fund for Freedom of Income (FFFAX)
One of Fidelity's "freedom" funds is this particular investment vehicle. This strategy is the most conservative of the bunch, and its goals are to both generate income and protection principles. Because of this, the fund is most suitable for investors who are more concerned with maintaining the value of their holdings than expanding the size of their assets. There is no requirement for a minimum first purchase while using FFFAX, which results in an expense ratio of 0.47 percent.Capital & Income Fund (FAGIX)
By maintaining a healthy stock-to-bond ratio, this five-star fund is able to fulfill the needs of investors seeking both growth and income from their investments. Because bonds make up approximately 80 percent of the portfolio and stocks makeup approximately 20 percent, the market risk is greater than it would be with a bond fund but lower than it would be with a stock fund. On the other hand, the returns over the long run have been consistently higher than those of the vast majority of bond funds. FAGIX offers an expense ratio of 0.67 percent, and there is no requirement for a minimum first purchase.Questions That Are Typically Asked (FAQs)
How does Fidelity generate revenue for the company?
A major financial company, Fidelity generates revenue through a wide variety of financial goods and services that it offers to its customers. One source of revenue for Fidelity is the expense ratio fees that are charged on mutual funds like the ones that are listed here. It is also a brokerage that generates revenue from the fees and commissions associated with trading.How do you go about opening an account with Fidelity?
You can open a new account with Fidelity on their website. You will be required to make a choice about the type of account, and if you wish to invest in mutual funds, you will most likely want either a retirement account or a brokerage account in order to do so. To fund the investment account, you will need to be prepared with personal information, such as the routing numbers for your bank accounts.