These are the best Fidelity funds by performance for your Fidelity 401(k).
Fidelity Investments is a powerhouse in retirement planning. Investors put $6.8 trillion in Fidelity 401(k)s, or more than Japan’s $5.4 trillion gross domestic product. Although stock funds are usually your best bet for high returns, investing entirely in stock may not be the best retirement strategy, so keep an eye on risk as you evaluate these Fidelity retirement funds. What follows are 10 of the best Fidelity funds for retirement that are available inside and outside of Fidelity 401(k)s, based on their 10-year performance as of December 2018. (Note: You’ll probably see the K Class version inside your 401(k).)
Fidelity OTC Portfolio (ticker: FOCPX)
The Fidelity OTC fund invests 80-plus percent of its portfolio in stocks trading in the Nasdaq composite index or over-the-counter markets. OTC markets have more small- and medium-sized companies, which generally offer more growth opportunities (hence the high returns of this fund), but also more risk. Add lower transparency and regulation on OTC markets and it’s easy to see why FOCPX gets a high-risk rating. Investors should also note the fund’s top 10 holdings top 47 percent of the portfolio, which is more than 25 percent in the technology sector. High-performing this one may be, but diversified it is not.
10-year returns: 19 percent
Net expense ratio: 0.88 percent
Risk: high versus large growth category
Fidelity Nasdaq Composite Index Fund (FNCMX)
If you favor index funds, the best performing Fidelity fund for retirement is FNCMX. The fund aims to track the performance of the Nasdaq, which includes more than 3,000 stocks. FNCMX holds 2,010 of them. As with FOCPX, it’s heavily weighted toward information technology. It also carries a lot of its weight in its top 10 holdings (32 percent of the portfolio), which include familiar names like Apple (AAPL), Amazon.com (AMZN), Microsoft Corp. (MSFT), and two classes of Google’s parent company, Alphabet, (GOOG, GOOGL). So while another high performer, order this one with a side of diversification for a less volatile retirement.
10-year returns: 16.8 percent
Net expense ratio: 0.30 percent
Risk: average versus large growth category
Fidelity Blue Chip Growth Fund (FBGRX)
FBGRX is a front-runner in the large-cap growth category, a tough category to master. (Giants can only grow so much more, after all.) Ranked the third-best large growth fund by U.S. News & World Report with an overall fund score of 9.7 out of 10, this may be the best Fidelity fund for large growth investors. It targets large blue-chip companies in the S&P 500 and Dow Jones Industrial Average. From those criteria, management takes only the ones it feels offer above-average growth potential. Bear in mind this means the fund is heavily invested in IT and consumer discretionary.
10-year returns: 17 percent
Net expense ratio: 0.72 percent
Risk: average versus large growth category
Fidelity Extended Market Index Fund (FSMAX)
While the Fidelity Nasdaq Composite Index Fund may be the best performing Fidelity index fund, FSMAX is almost as high-performing for one-sixth the cost and far more diversification. Formerly FSEMX, FSMAX is a good Fidelity retirement fund for those who want mid- to small-cap exposure. It holds smaller U.S. companies not included in the S&P 500 like Tesla (TSLA) and Square (SQ). This can make it a nice complement to a large-cap or S&P 500 index fund. It’s well-balanced among all 3,154 holdings and has representation in every stock sector.
10-year returns: 14 percent
Net expense ratio: 0.05 percent
Risk: average versus mid-cap blend category
Fidelity Contrafund (FCNTX)
Contrarians and value investors rejoice: FCNTX is a fund after your heart. It invests in companies management believes to be undervalued relative to revenue or earnings growth prospects. These companies are largely in tech and financial services, and include Amazon, Facebook (FB), and Berkshire Hathaway A shares (BRK.A) as its top three holdings. Contrafund is the largest actively managed fund. It ranks No. 85 in the Large Growth category and 7.1 overall, according to U.S. News & World Report. With more than 40 percent of its portfolio in the top 10 holdings, it’s not the most diversified, either.
10-year returns: 14.1 percent
Net expense ratio: 0.74 percent
Risk: low versus large growth category
Fidelity 500 Index Fund (FXAIX)
With a tidy expense ratio of only 0.02 percent, the Fidelity 500 Index fund is the lowest-cost fund of these 10 best performing Fidelity funds for retirement. Formerly FUSEX, the fund replicates the S&P 500, making it a nice option for index investors or those looking for large blend exposure. U.S. News & World Report ranks it No. 5 in the large-blend category and scores it 9.5 out of 10. You won’t get international exposure with FXAIX, but you will get representation across all 11 sectors (albeit a heavy concentration in technology at nearly one-quarter of the portfolio).
10-year returns: 13.4 percent
Net expense ratio: 0.62 percent
Risk: average versus large blend category
Fidelity Low-Priced Stock Fund (FLPSX)
Another value investing fund, FLPSX began as a way of investing in out-of-favor smaller companies. Today it invests primarily in stocks trading for $35 or less and is more mid-cap than small. U.S. News & World Report ranks it the fifth-best mid-cap value fund. With 37 percent of its almost 900 holdings being foreign stocks, FLPSX is one of the most diversified of the best performing fidelity funds for retirement. It has representation in all sectors, although it favors consumer cyclicals (23 percent of the portfolio) and has token representation in communication services (0.43 percent of the portfolio).
10-year returns: 13.2 percent
Net expense ratio: 0.62 percent
Risk: low versus mid-cap value category
Fidelity Puritan Fund (FPURX)
More conservative retirement investors might prefer the Fidelity Puritan fund to some of the other on this list. With an objective to obtain income and growth without taking unreasonable risk, FPURX invests at least 25 percent of its portfolio in fixed income like bonds and about 60 percent in stocks or other equities. It’s the best performing Fidelity fund for retirement that holds any bonds. U.S. News & World Report ranks it No. 1 with an allocation goal of 50 to 70 percent equity and gives it an overall score of 9 out of 10.
10-year returns: 10.55 percent
Net expense ratio: 0.54 percent
Risk: average versus allocation 50 to 70 percent equity category
Fidelity Balanced Fund (FBALX)
Another top-ranking balanced fund, FBALX is No. 3 in the 50 to 70 percent equity allocation category with a score of 8.9, according to U.S. News & World Report. Like Fidelity Puritan, FBALX invests at least 25 percent of its portfolio in fixed income and about 60 percent in stocks or other equities. FBALX differentiates itself from Puritan by favoring information technology over health care and bonds with a higher interest-rate sensitivity. While the two funds are matched point-for-point in 10-year performance, FBALX fractionally outperformed its compatriot over the past three years.
10-year returns: 10.5 percent
Net expense ratio: 0.53 percent
Risk: average versus allocation 50 to 70 percent equity category
Fidelity Freedom Index Funds
Fidelity’s Freedom Funds are target-date funds. They’re among the most popular Fidelity retirement funds, and for good reason: Target-date funds are your one-stop shop. They adjust their allocation to become more conservative as the target year approaches. With an eye toward proper allocation, these won’t be your best performing Fidelity retirement funds, but they may be the best to reach your retirement goals. Of the 48 Freedom Funds on offer, the index variety are the least expensive and beat 81 percent of their peers on average over the past five years.
Five-year performance: beat 81 percent of peers, on average
Expense ratio: 0.14 percent
Risk: above average versus respective target date category
The best performing Fidelity funds for retirement.
These are the 10 of the best performing Fidelity funds for retirement that you can use inside or outside your Fidelity 401(k):
- Fidelity OTC Portfolio (FOCPX)
- Fidelity Nasdaq Composite Index Fund (FNCMX)
- Fidelity Blue Chip Growth Fund (FBGRX)
- Fidelity Extended Market Index Fund (FSMAX)
- Fidelity Contrafund (FCNTX)
- Fidelity 500 Index Fund (FXAIX)
- Fidelity Low-Priced Stock Fund (FLPSX)
- Fidelity Puritan Fund (FPURX)
- Fidelity Balanced (FBALX)
- Fidelity Freedom Index Funds
