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Top Fidelity Mutual FundsWhen it comes to mutual fund investing, Fidelity is one of the biggest names in the business. Their Fidelity Magellan Fund (est. in 1963) took on an almost legendary status under the management of guru Peter Lynch from 1977-1990, reaping great rewards for their investors with more than 25% annualized returns over the period. After approaching $100B in assets, the Magellan Fund now has just over $50B, keeping it in the rankings of the largest mutual funds. But Fidelity is more than just a one fund company. There are dozens and dozens of different Fidelity mutual funds, ranging from sector funds that invest in certain sectors of the economy (health care, energy, etc.) to bond funds to index funds to their Lifecycle Freedom Funds that adjust their investment mix over time to remain consistent with your investing goals. In this guide we will look at the most popular and highest performing Fidelity mutual funds, with information on investment requirements, fees, and returns.
Fidelity Freedom Funds - Asset Manager FundsFidelity has been in the mutual fund game for a long time. One of their oldest funds, the Puritan Fund, dates back to 1947 and has brought in average annual returns of 11.5% - that's a pretty good record. But they have many different families of funds. Let's start with their Fidelity Freedom Funds, also called the Lifecycle Funds. These mutual funds base their investment mix on a specific retirement target date. There is a Fidelity Freedom 2020 fund (ticker symbol FFFDX), for example, that seeks high total return until the year 2020, then it switches its' investment mix to focus on high current income and capital preservation. There are Freedom Funds with staggered dates to help you meet your investment objectives - 2025, 2030, 2035, etc. Just pick the date when you want the investments to switch from a growth focus to an income focus, and you are done. You don't have to worry about adjusting your investments each year or worry about allocations. Over the last 5 years, the 2010 fund has returned 6.67% per year, while the 2030 fund has returned 8.52%. These funds have a relatively low expense ratio (about 3/4 of a percent), and they keep expense low by investing only in Fidelity Funds (bond funds, international, growth, etc.). These funds were first introduced in mid 1990s, with additional maturation dates added in 2003 and 2006. Minimal initial investment is $2500, with $250 for additional investments. Their Asset Manager funds work on similar principles, with investment goals split between equities and bonds. The Fidelity Asset Manager 20%, for example, is a conserative fund that aims to keep just 20% of its assets in equities, and the remaining 80% in bonds and money market funds to preserve capital and earn short term income. They have an even lower expense ratio, closer to 6/10ths of a percent, with the same requirements for minimum investment amounts. These funds have averaged returns of about 7% over the last 5 years.
Fidelity Index FundsFidelity also offers a family of index funds (under the Spartan brand name) for people looking for investments that track broader market indices, like the NASDAQ or S&P 500. Fund managers for these funds have very little lee-way in their investment decisions since they need to mirror both the make-up and return of the index they emulate. The oldest of these funds has been around since 1988 - the Spartan U.S. Equity Index Fund. Most index funds also have lower expense ratios since the managers need to do little or no research - they simply balance the asset mix to copy the index they are tracking - no real decision making or expenses required in running it. For example, the fund mentioned above has an expense ratio of just .07%, which is pretty close to zero! For more information on Index funds, check out "All About Index Funds" by Ferri. Here is a list of the Fidelity Index Funds, and their minimum investment criteria:
List of Fidelity Select Portfolios - Sector FundsAnother popular family of Fidelity Funds are there Select Portfolios which focus on specific industries. Rather than you trying to pick the best chemical companies, you can buy into the Select Chemicals Portfolio and know that the Fidelity managers have hand-picked dozens of the best chemical stocks for you. The ten major sectors they track are: Consumer Discretionary, Industrials, Consumer Staples, Information Technology, Energy, Materials, Financials, Telecommunication Services, Health Care, and Utilities. Within those groups, there are multiple Select funds to choose from usually. For example, within the Health Care sector, there is the Select Medical Equipment and Systems Portfolio (FSMEX), the Select Medical Delivery Portfolio (FSHCX), the Select Pharmaceuticals Portfolio (FPHAX), and the Select Biotechnology Portfolio (FBIOX) -- allowing you to choose a specific area of health care investment. We like using these funds when we think a particular industry will prosper over the next few years. If you think technology is due for a run-up, instead of trying to pick 4 or 5 hot tech companies, we prefer to buy one or two of the Fidelity Select funds and let them do the picking and help minimize the risk. There are over 40 different Select Portfolios, listed below with their ticker symbols:
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