9 Best Fidelity Index Funds for Retirement

Index funds are often better alternatives to individual securities.

Unlike with other investment vehicles, index funds can offer investors wide diversification at low cost. And Fidelity is well known for providing quality index funds with some of the lowest fees. Ben Johnson, director of global exchange-traded fund research at Morningstar, says that as far as competing with the broader market goes, “It’s really hard to do better in most cases than you would with a low-cost index fund from a solid parent like Fidelity.” And Scott O’Reilly, head of index, sector, thematic and factor investment products at Fidelity, says Fidelity makes available to investors many “of the key exposures they may be looking for.” Fidelity’s index funds comes with no investment minimums, meaning novice to seasoned investors can easily buy in to Fidelity’s top index funds at any time.

Fidelity Nasdaq Composite Index Fund (ticker: FNCMX)

As the name implies, FNCMX attempts to mimic the overall return of the Nasdaq Composite Index, including price and yields. The fund has a five-star rating from Morningstar, which is a measure of past performance. In keeping with its benchmark, the fund’s top holdings include Apple Inc. (AAPL), Microsoft Corp. (MSFT), Amazon.com Inc. (AMZN) and Tesla Inc. (TSLA). On Lipper’s past-performance scale, the fund ranks five out of five for total return, consistency, tax efficiency and expenses, and the fund carries a four out of five ranking on capital preservation. FNCMX has a 10-year average annual return of 18.7% and a net expense ratio of 0.29%, meaning you’ll pay $29 per year for every $10,000 invested.

10-year average annual return: 18.7%

Net expense ratio: 0.29%

Fidelity U.S. Sustainability Index Fund (FITLX)

Founded in 2017, FITLX is an index fund containing investments with high environmental, social and corporate governance, or ESG, scores. The fund’s benchmark, the MSCI USA ESG Leaders Index, scores the top ESG firms in the MSCI USA Index. According to Morningstar Associate Analyst Lan Anh Tran, FITLX’s ranking and weighting of the companies across this index then creates “a well-diversified portfolio that has a very similar style and sector makeup to its parent index.” For investors interested in environmentally friendly or socially conscious companies, this is a definite advantage. With only a four-year track record to draw from, FITLX has a lifetime average annual return of 17.1% and a net expense ratio of 0.11%. FITLX has a four-star and a silver Morningstar analyst rating, which represents an analyst’s outlook on future performance.

Lifetime average annual return: 17%

Net expense ratio: 0.11%

Fidelity ZERO Large Cap Index Fund (FNILX)

FNILX is a no-fee fund that is part of a family of funds available to individual investors who have Fidelity brokerage accounts. That said, FNILX is a Morningstar four-star fund that tracks the Fidelity U.S. Large Cap Index. This is a float-adjusted, market cap-weighted index tracking the performance of 500 of the largest companies in the U.S. The fund’s top holdings are currently Apple Inc., Microsoft Corp., Amazon.com Inc. and Alphabet Inc. (GOOGL). The fund was launched in 2018, and its lifetime return is 16.1%. The fund rates four out of five overall from Lipper on total return and consistency, and it rates five out of five on capital preservation, tax efficiency and expenses.

Lifetime average annual return: 16.1%

Net expense ratio: 0%

Fidelity 500 Index Fund (FXAIX)

Investing at least 80% in stocks included in the S&P 500, FXAIX broadly tracks the overall performance of some of the largest public stocks in the U.S. market. With the market having performed well in recent years, FXAIX has a 10-year average annual return of 15.4%, which correlates closely to its benchmark index over the same period. In fact, the S&P has only beaten FXAIX by a mere 0.01% over the past decade. With returns like this, it’s no surprise that FXAIX has a five-star rating from Morningstar. The fund also ranks five out of five across all metrics from Lipper.

10-year average annual return: 15.4%

Net expense ratio: 0.015%

Fidelity Total Market Index Fund (FSKAX)

With the Dow Jones U.S. Total Stock Market Index as its benchmark, FSKAX tracks a broad range of U.S. stocks. Its top 10 holdings make up 35.5% of the overall portfolio. Morningstar rates the fund four stars and gold, which is the highest rating a fund can receive from analysts. Tran says FSKAX “provides well-diversified, low-turnover exposure to the broad U.S. stock market.” Tran says that the fund has consistently outperformed its category since inception in 2011. FSKAX has a 10-year average annual return of 14.9% and a net expense ratio of 0.015%.

10-year average annual return: 15%

Net expense ratio: 0.015%

Fidelity Multi-Asset Index Fund (FFNOX)

Launched in 1999, FFNOX invests in seven different stock and bond index funds. The purpose of this fund is to provide investors with a broadly diversified, index investment strategy. This strategy has paid off well for the fund’s holders. With a net expense ratio of 0.12%, FFNOX has an average annual return of 11.1% over the past 10 years. Looking at past performance, the fund carries a five-star rating from Morningstar. The fund has a four-out-of-five tax-efficiency rating and a five-out-of-five overall rating from Lipper on capital preservation and expenses.

10-year average annual return: 11.1%

Net expense ratio: 0.12%

Fidelity International Index Fund (FSPSX)

FSPSX tracks the MSCI EAFE Index. This index correlates to the performance of stock markets foreign to the U.S. In the view of Morningstar Senior Analyst Daniel Sotiroff, FSPSX offers “low-cost exposure to major overseas markets.” Sotiroff goes on to say that FSPSX “has a well-diversified portfolio and rock-bottom fee that should add up to strong category-relative performance over the long run.” He gives FSPSX a silver rating. Only 13% of the fund’s holdings are held in its top 10. FSPSX’s top-three holdings are over-the-counter-listed Nestle SA (NSRGY), ASML Holding NV (ASML) and Roche Holdings AG (RHHBY). The fund has a 10-year average annual return of 7.2% and a net expense ratio of 0.035%.

10-year average annual return: 7.2%

Net expense ratio: 0.035%

Fidelity U.S. Bond Index Fund (FXNAX)

FXNAX was brought to market in 1990. With the way bonds performed relative to the broader market in 2021, FXNAX carries a Morningstar past performance rating of only three stars. The fund holds 65.9% of its portfolio in its top-five bond issuers. FXNAX’s top-three issuers are U.S Treasury notes, Fannie Mae and the Federal Home Loan Mortgage Corp. In fact, the fund’s forward-looking guidance carries a Morningstar gold rating. Morningstar analyst Neal Kosciulek says, “This is one of the cheapest bond funds available.” Kosciulek goes on to say that FXNAX’s “rock-bottom fee and conservative portfolio make it hard to beat.” Those looking to beat recent high inflation numbers may find exactly what they’re looking for with FXNAX. The fund has a 10-year average annual return of 2.5% and a net expense ratio of only 0.025%. FXNAX yields 1.8%.

10-year average annual return: 2.6%

Net expense ratio: 0.025%

Fidelity Intermediate Treasury Bond Index Fund (FUAMX)

Unlike the other bond fund on this list, FUAMX has a past performance rating of five stars from Morningstar. FUAMX has 99.6% of its total portfolio in only two bond issuers: U.S. Treasury notes and U.S. Treasury bonds. The remaining 0.4% is held in cash and other assets. FUAMX rates three out of five from Lipper on total return, consistency, capital preservation and tax efficiency. The fund rates five out of five from Lipper on expenses. Its net expense ratio is only 0.03%. And it has a 10-year average annual return of 2.1%. The fund’s yield is 1.4%. The average maturity of the bonds in the fund is 7.1 years.

9 best fidelity index funds for retirement:

10-year average annual return: 2.1%

Net expense ratio: 0.03%

— Fidelity Nasdaq Composite Index Fund (FNCMX)

— Fidelity U.S. Sustainability Index Fund (FITLX)

— Fidelity ZERO Large Cap Index Fund (FNILX)

— Fidelity 500 Index Fund (FXAIX)

— Fidelity Total Market Index Fund (FSKAX)

— Fidelity Multi-Asset Index Fund (FFNOX)

— Fidelity International Index Fund (FSPSX)

— Fidelity U.S. Bond Index Fund (FXNAX)

— Fidelity Intermediate Treasury Bond Index Fund (FUAMX)