The Best-Performing Fidelity Funds for Retirement

These are the best Fidelity funds by performance for your Fidelity 401(k).

Fidelity Investments is a powerhouse in retirement planning. Investors put more into Fidelity 401(k)s 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. You should also think about diversification across sectors and regions. And pay attention to fund cost; expense ratios eat into long-term returns. 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 June 30. (Note: It is up to your company which funds are available in your 401(k). You may or may not have access to these in your company plan. If you do, you’ll probably see the lower-cost K-class version inside your 401(k). If you don’t, all of them are available in individual retirement accounts.)

Fidelity OTC Portfolio (ticker: FOCPX)

The Fidelity OTC fund invests more than 80% 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. That explains the high returns of this fund, but it also comes with more risk. Add lower transparency and regulation on OTC markets, and it’s easy to see why FOCPX gets an above-average risk rating. However, it has scaled back its aggressiveness since Chris Lin took over as lead fund manager in 2018. Investors should also note the fund’s top 10 holdings account for more than 45% of the overall portfolio, which is almost 38% in the technology sector. (This is still less than the Nasdaq composite index overall, which is more than 41% in the tech sector.) Though FOCPX is high-performing, it’s not highly diversified in comparison with other index funds. It’s also not cheap at a 0.89% expense ratio, which can eat into long-term returns.

10-year average annual returns: 19.5%
Net expense ratio: 0.89%
Risk: above average versus U.S. large growth category

Fidelity Blue Chip Growth Fund (FBGRX)

It’s not easy to find blue-chip companies with big growth potential; giants can only grow so much bigger, after all. But this is exactly what the managers of FBGRX aim to do. This growth fund targets large blue-chip companies in the S&P 500 and Dow Jones Industrial Average. From those criteria, management takes only the companies it feels offer above-average growth potential. Bear in mind this means the fund is heavily invested in information technology (more than 38% of the total portfolio) and consumer discretionary (more than 25% of the total portfolio). It also comes at a not-insignificant price of 0.8% net expenses.

10-year average annual returns: 18.76%
Net expense ratio: 0.8%
Risk: above average versus U.S. large growth category

Fidelity Nasdaq Composite Index Fund (FNCMX)

If you favor index funds, the best-performing Fidelity fund for retirement is FNCMX. Unlike FOCPX, which tries to beat the Nasdaq composite index, FNCMX just tries to track the index’s performance. This makes FNCMX a more affordable means of investing in the Nasdaq, although it’s still pricey for an index fund with a 0.3% expense ratio. FNCMX holds 2,089 of the more than 3,000 stocks in the benchmark index. Since it’s a passive fund, it can’t make active bets, such as by paring back sector exposures the way FOCPX has done of late. As a result, FNCMX is more than 41% weighted toward the tech sector, just like its underlying index. It also carries a lot of its weight in its top 10 holdings (nearly 45% of the portfolio), which include familiar names like Microsoft Corp. (MSFT), Apple (AAPL), Amazon.com (AMZN), Facebook (FB) and Google’s parent company, Alphabet (GOOG, GOOGL). So while FNCMX is another high performer, order this one with a side of diversification for a less volatile retirement.

10-year average annual returns: 18.05%
Net expense ratio: 0.3%
Risk: above average versus U.S. large growth 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. Given that the lead manager, Will Danoff, won Morningstar’s Domestic Stock Fund Manager of the Year in 2007, his beliefs are ones worth noting. Right now, he’s thinking opportunity lies in familiar tech names like Amazon, Facebook and Microsoft, as well as financial conglomerate Berkshire Hathaway (BRK.A), which rounds out the fund’s top four holdings. Contrafund is the largest actively managed fund but has fallen down the rankings by U.S. News from No. 95 to No. 209 with a score of 5.3 out of 10 overall. Despite this, Morningstar still sees potential in the fund, giving it a Silver rating (Gold for the cheaper share classes, which you’ll likely find in your 401(k)) for its successful track record and effective approach.

10-year average annual returns: 15.57%
Net expense ratio: 0.85%
Risk: average versus U.S. large growth category

Fidelity 500 Index Fund (FXAIX)

FXAIX is offered by more than half of the 401(k) plans on Fidelity’s platform, according to the company, making it one of the most accessible Fidelity funds for retirement. It also happens to be among the best-performing Fidelity funds for retirement with a 10-year return of 13.97% as of June 30. With a tidy expense ratio of only 0.015%, the Fidelity 500 Index Fund is one of the lowest-cost funds on this list. In fact, it is the single lowest-cost mutual fund tracking the S&P 500 offered anywhere. Morningstar gives it a Gold badge. Formerly FUSEX, the fund replicates the S&P 500, making it a nice option for index investors or those looking for large blend exposure.

10-year average annual returns: 13.97%
Net expense ratio: 0.015%
Risk: average versus U.S. large blend category

Fidelity Total Market Index Fund (FSKAX)

Fidelity’s Total Market Index Fund provides exposure to a broader swath of the U.S. stock market than S&P 500 funds like FXAIX but for the same price. With almost 3,500 holdings, FSKAX reaches far beyond the S&P 500. It does still limit companies to those with market values greater than $10 billion, though, so it’s another large-cap fund. But no single company makes up more than 5% of the overall portfolio (a good metric to use when trying to avoid over-concentration). For broad stock market exposure at index-fund pricing, FSKAX is definitely one of the best-performing Fidelity funds for retirement.

10-year average annual returns: 13.68%
Net expense ratio: 0.015%
Risk: above average versus U.S. large blend category

Fidelity Worldwide Fund (FWWFX)

Everyone should have some international exposure, and FWWFX is the best-performing Fidelity fund that reaches beyond the U.S. — but just barely. With more than 60% of its portfolio home-based, it’s not the most international of worldwide funds. If your retirement plan offers a purely international ex-U.S. option, that may be better — likewise, any fund that doesn’t cost nearly 1% in annual expenses (although the 401(k) version of this fund should be cheaper than that). Now for what FWWFX does well: It gives you exposure to more than 11 countries other than the U.S. It also keeps individual stock weights below 5%, and, despite being pricey for an index fund, is below the category average on cost while being well above average in performance. Morningstar expects the fund to continue to outperform, but by a small margin.

10-year average annual returns: 12.55%
Net expense ratio: 0.99%
Risk: average versus world large stock category

Fidelity Extended Market Index Fund (FSMAX)

Another popular fund in Fidelity 401(k) plans is the Fidelity Extended Market Index Fund. This one provides small- and mid-cap exposure, which has been in short supply among the other top-performing Fidelity funds so far. It’s benchmarked to the Dow Jones U.S. Completion Total Stock Market Index, which excludes companies in the S&P 500. This can make FSMAX a nice complement to a large-cap or S&P 500 index fund. FSMAX is also highly diversified among those smaller companies with more than 3,100 holdings, the top 10 of which account for only about 7% of the portfolio, and has representation in every market sector. What’s more, the fund has dropped its price tag from 0.045% to 0.036%, which never hurts.

10-year average annual returns: 12.32%
Net expense ratio: 0.036%
Risk: above average versus U.S. mid-cap blend category

Fidelity Puritan Fund (FPURX)

For a less-aggressive approach to retirement investing, consider one of the oldest funds on the market, the Fidelity Puritan Fund. Founded in 1947, FPURX invests about 40% of its portfolio in fixed-income securities like bonds and other debt investments. These are primarily investment-grade credit and mortgage pass-through securities. With this more conservative approach to investing comes more conservative returns, however. FPURX finished the 2010s decade with just more than a 10% average annual return. So it’s more of a best-performing Fidelity fund for semi-conservative retirement investors, as opposed to best-performing overall. That said, it has consistently beaten its 60/40 allocation peer, the Fidelity Balanced Fund (FBALX) in annual returns. FPURX is also a five-star fund from Morningstar.

10-year average annual returns: 10.54%
Net expense ratio: 0.53%
Risk: above average versus U.S. allocation 50% to 70% equity category

Fidelity zero expense ratio index funds

In 2018, Fidelity debuted a lineup of zero expense ratio, zero minimum index mutual funds: the Fidelity Zero Large Cap Index Fund (FNILX), Fidelity Zero Extended Market Index (FZIPX), Fidelity Zero Total Market Index Fund (FZROX) and Fidelity Zero International Index Fund (FZILX). Being nascent funds, these don’t have the track record of others on this list. They also aren’t likely to be included in 401(k) plans yet, as most plan sponsors wait for a fund to be at least three years old before adding it to their plan. But with no investment minimum and no expense ratio to contend with, these can be good Fidelity funds for retirement investing outside of your employer-sponsored plan.

The best-performing Fidelity funds for retirement:

— Fidelity OTC Portfolio (FOCPX)

— Fidelity Blue Chip Growth Fund (FBGRX)

— Fidelity Nasdaq Composite Index Fund (FNCMX)

— Fidelity Contrafund (FCNTX)

— Fidelity 500 Index Fund (FXAIX)

— Fidelity Total Market Index Fund (FSKAX)

— Fidelity Worldwide Fund (FWWFX)

— Fidelity Extended Market Index Fund (FSMAX)

— Fidelity Puritan Fund (FPURX)

— Fidelity zero expense ratio index funds

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The Best-Performing Fidelity Funds for Retirement originally appeared on usnews.com

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