Unless you’re buying a fund that matches a broad market benchmark like the Dow Jones Total U.S. Market Index or the S&P 500 index, your fund selection will either outperform or underperform them.
The reasoning here is simple — if the index’s return is the “market average,” then not all investors and the funds they pick can be above average; some naturally have to be below average with underperforming returns.
In reality, the actual distribution of results is even more skewed than one might think. For instance, the S&P Indices Versus Active (SPIVA) study found that over the past 10 years, 91.4% of all domestic equity funds underperformed the S&P Composite 1500 index.
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With the benefit of hindsight, identifying the best-performing funds of the past decade is easy, but experts caution that this outperformance should not be extrapolated to predict future results.
“Dumping money into the winners of the last decade means you’re deliberately buying what is now expensive compared to the rest of the market, which bodes poorly for expected returns,” says Allen Mueller, director of financial planning at investment advisory firm 7 Saturdays Financial.
With that in mind, here’s a look at the top eight Fidelity mutual funds out of a total 323 options, ranked in ascending order by their trailing 10-year annualized returns as of June 30:
| Fund | 10-year annualized return |
| Fidelity Trend Fund (ticker: FTRNX) | 15.7% |
| Fidelity Nasdaq Composite Index Fund (FNCMX) | 16% |
| Fidelity Growth Discovery Fund (FDSVX) | 16% |
| Fidelity Select Software and IT Services Portfolio (FSCSX) | 17% |
| Fidelity Blue Chip Growth Fund (FBGRX) | 17.8% |
| Fidelity OTC Portfolio (FOCPX) | 17.9% |
| Fidelity Select Technology Portfolio (FSPTX) | 20.4% |
| Fidelity Select Semiconductors Portfolio (FSELX) | 27.6% |
Fidelity Trend Fund (FTRNX)
In investing, a trend refers to the general direction in which the market or the price of an asset is moving over a period. Trends can be upward (bullish), downward (bearish) or sideways (neutral). Trend-following strategies therefore attempt to capitalize on these movements by aligning investments with the prevailing market direction. For funds following this strategy, “the trend is your friend.”
One of the dominant trends of the past few years has involved growth stocks, particularly in the technology sector. Unsurprisingly, FTRNX’s top holdings are dominated by companies such as Nvidia Corp. (NVDA), Microsoft Corp, (MSFT) and Apple Inc. (AAPL). However, the trend-following strategy comes with greater portfolio turnover of 38% and a higher 0.49% expense ratio.
10-year annualized return: 15.7%
Fidelity Nasdaq Composite Index Fund (FNCMX)
You’re probably familiar with the Nasdaq-100 index — a benchmark of the 100 largest non-financial companies traded on the Nasdaq exchange. But did you know it also has a broader counterpart in the Nasdaq Composite? This index takes the Nasdaq-100 and adds more than 3,000 mid- and small-cap Nasdaq-listed stocks to provide greater diversification. To track this index, Fidelity offers FNCMX.
FNCMX’s top holdings still resemble that of the Nasdaq-100, with all of the “Magnificent Seven” stocks — Microsoft, Apple, Nvidia, Amazon.com Inc. (AMZN), Meta Platforms Inc. (META), Alphabet Inc. (GOOG, GOOGL) and Tesla Inc. (TSLA) included. This is because the fund’s index is market-cap-weighted, which gives large-cap stocks higher emphasis. FNCMX charges a 0.29% expense ratio.
10-year annualized return: 16%
Fidelity Growth Discovery Fund (FDSVX)
“Growth stocks are those that are growing or are expected to grow earnings at an above-average rate, for which investors are willing to pay a premium,” says Daniel Dusina, chief investment officer at wealth management firm Blue Chip Partners Inc. “The last 10 years, which consisted of ultra-low interest rates and a relatively stable domestic economy, aligned well for growth stocks.”
So far, FDSVX’s actively managed strategy of picking growth stocks has helped the fund excel. In the Morningstar “large growth” category, this fund has earned a five-star rating, meaning that it has outperformed the vast majority of its peers on a risk-adjusted basis. However, the use of active management comes at a high 30% turnover rate and pricey 0.67% expense ratio.
10-year annualized return: 16%
Fidelity Select Software and IT Services Portfolio (FSCSX)
“Along with growth stocks outperforming value stocks over the last decade, we also saw a lot of tech sector development that fueled the rise in valuations,” says Anessa Custovic, chief investment officer at Cardinal Retirement Planning Inc. Tech stocks now sit at roughly 32% of the S&P 500 index by weight, a testament to their importance for investors.
Now, the tech sector isn’t a homogenous entity. Within the sector, there’s substantial variation between industries. To focus on software and IT services companies like cloud computing, database, and cybersecurity vendors, Fidelity offers FSCSX. In addition to Microsoft, this fund holds Adobe Inc. (ADBE), Salesforce Inc. (CRM), Palo Alto Networks Inc. (PANW) and Oracle Corp. (ORCL).
10-year annualized return: 17%
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Fidelity Blue Chip Growth Fund (FBGRX)
A cheaper and more long-standing actively managed growth fund to consider instead of FDSVX is FBGRX. Dating back to 1987, this fund has steadily cut its expense ratio down to 0.48% at present. As its name suggests, FBGRX focuses on U.S.-listed growth stocks that qualify as blue-chips — in Fidelity’s view, this means “well-known, well-established and well-capitalized.” Currently, it has 389 holdings.
Again, the top holdings feature many of the same technology, communication and consumer discretionary growth stocks seen in previous funds — Nvidia, Apple, Microsoft, Amazon, Alphabet and Meta Platforms. If you prefer the ability to trade throughout the day as you would with a stock, Fidelity also offers an ETF version of FBGRX, the Fidelity Blue Chip Growth ETF (FBCG).
10-year annualized return: 17.8%
Fidelity OTC Portfolio (FOCPX)
The over-the-counter, or OTC, designation is reserved for companies that do not trade on a stock exchange, such as the New York Stock Exchange or the Nasdaq. Commonly, this includes penny stocks, but it can also encompass some blue-chip foreign companies that consciously choose to avoid listing with the major exchanges to avoid higher compliance and regulatory costs.
FOCPX’s portfolio is able to take advantage of select OTC stocks, with a focus on small- and mid-cap companies. However, the fund still principally focuses on Nasdaq-listed stocks, and endeavors to maintain at least a 25% weighting in the technology sector. As with many of Fidelity’s active mutual funds, FOCPX has a high turnover rate of 21% and a pricey 0.7% expense ratio.
10-year annualized return: 17.9%
Fidelity Select Technology Portfolio (FSPTX)
“Overall, growth and information technology have come to dominate the U.S. market over the trailing 10-year period,” Dusina says. “Funds with high exposure to tech heavyweights such as Apple, Microsoft and Nvidia were rewarded with market-leading returns.” Unsurprisingly, FSPTX, with its pure-play technology sector focus, stands among Fidelity’s top performing funds of this decade.
It’s crucial to note that FSPTX lacks exposure to Alphabet, Meta Platforms, Amazon and Tesla. This is because these four companies actually belong to the communications and consumer discretionary sectors, despite their technology-centric business segments. Thus, the fund’s Big Tech focus is limited to Nvidia, Apple and Microsoft. The fund charges a 0.64% expense ratio.
10-year annualized return: 20.4%
Fidelity Select Semiconductors Portfolio (FSELX)
Thanks to the chip boom, FSELX tops Fidelity’s list with the best 10-year annualized return of 27.6%. The 44 companies in this fund have strongly benefited from numerous sector-specific tailwinds, including generous subsidies and legislation aimed at increasing domestic manufacturing, a re-shoring movement and the immense infrastructure needs of artificial intelligence (AI) applications.
FSELX’s portfolio is very top-heavy, though. Nvidia’s recent performance briefly pushed its market cap to over $3 trillion and its weight in FSELX to 26%. The other top holdings, including Micron Technology Inc. (MU), Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) and ASML Holdings NV (ASML) don’t even come close. FSELX charges a 0.65% expense ratio.
10-year annualized return: 27.6%
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8 Top-Performing Fidelity Funds for Retirement originally appeared on usnews.com
Update 07/23/24: This story was previously published at an earlier date and has been updated with new information.
