This year has marked yet another bull market, capping off what has been a stellar decade for U.S. equities. Over the past 10 years, the S&P 500 has delivered an impressive annualized total return of 13.3%.
According to the SPIVA, the S&P Dow Jones Indices’ scorecard for active fund performance, 84.7% of all domestic large-cap funds have underperformed the S&P 500 in the past decade. But what about the other 15.3%?
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As you’ll see from Fidelity’s lineup, the funds that beat the odds over the past decade generally share some common themes. Many of these funds lean heavily into technology stocks, favor growth-oriented companies or focus on large-cap names, and all of these categories have thrived in recent years.
However, experts caution that while seemingly intuitive, chasing past performance is likely a suboptimal strategy. “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 315 options, ranked in ascending order by their trailing 10-year annualized returns as of Oct. 31:
| Fidelity Fund | 10-Year Annualized Return | Expense Ratio |
| 8. Fidelity Nasdaq Composite Index Fund (ticker: FNCMX) | 15.7% | 0.29% |
| 7. Fidelity Trend Fund (FTRNX) | 15.7% | 0.49% |
| 6. Fidelity Growth Discovery Fund (FDSVX) | 16.0% | 0.66% |
| 5. Fidelity Select Software and IT Services Portfolio (FSCSX) | 16.8% | 0.64% |
| 4. Fidelity OTC Portfolio (FOCPX) | 17.1% | 0.73% |
| 3. Fidelity Blue Chip Growth Fund (FBGRX) | 17.4% | 0.47% |
| 2. Fidelity Select Technology Portfolio (FSPTX) | 20.3% | 0.64% |
| 1. Fidelity Select Semiconductors Portfolio (FSELX) | 26.6% | 0.65% |
Fidelity Nasdaq Composite Index Fund (FNCMX)
One of the winners of the past decade was the Nasdaq-100 Index, which targets the largest 100 Nasdaq-listed stocks minus those from the financial sector. This resulted in an overweighting to large-cap tech stocks, in particular the “Magnificent Seven” stocks, which have been responsible for driving outperformance. However, the Nasdaq-100 has a more diversified counterpart in the Nasdaq composite.
The top holdings of this index include Apple Inc. (AAPL), Nvidia Corp. (NVDA), Microsoft Corp. (MSFT), Amazon.com Inc. (AMZN), Meta Platforms Inc. (META), Alphabet Inc. (GOOG, GOOGL) and Tesla Inc. (TSLA), matching the Nasdaq-100 closely. However, it includes another 3,000 small- and mid-cap stocks, making it more diversified. To track this index, Fidelity offers FNCMX at a 0.29% expense ratio.
10-year annualized return: 15.7%
Fidelity Trend Fund (FTRNX)
In investing, a “trend” refers to the sustained movement of a particular asset class, sector or market style over time. One prominent trend, as noted earlier, has been the outperformance of large-cap growth stocks. A trend-following fund like FTRNX systematically operates on the principle that “the trend is your friend,” aiming to capitalize on persistent market movements. As a result, it now has a growth tilt.
However, despite its potential for strong performance, trend-following strategies have downsides. FTRNX’s active approach results in a high turnover rate of 65%, which can negatively impact tax efficiency due to more frequent and large capital gains distributions. Additionally, its 0.49% expense ratio is higher than many passive alternatives, adding to headwinds against long-term performance.
10-year annualized return: 15.7%
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.”
In particular, some actively managed growth funds like FDSVX have been able to outperform their benchmarks during this period. Over the past 10-, five-, three- and one-year trailing periods, FDSVX has not only outperformed the Morningstar Large Growth peer category, but it has also soundly beaten the Russell 3000 Growth Index. This is all the more impressive considering its relatively high 0.66% 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. Many of these tech giants were de facto growth stocks, having increased their revenues, earnings and margins at a higher rate compared with the broad market.
However, investors can home in on tech stocks via a dedicated tech sector fund as opposed to a broad growth fund. One of Fidelity’s most notable picks here is FSCSX, which focuses on software and IT services companies. Top holdings currently include Microsoft, Salesforce Inc. (CRM), Adobe Inc. (ADBE), Autodesk Inc. (ADSK) and Palo Alto Networks Inc. (PANW). FSCSX charges a 0.64% expense ratio.
10-year annualized return: 16.8%
Fidelity OTC Portfolio (FOCPX)
FOCPX is a bit of an oddity in Fidelity’s fund lineup. Launched in 1984, the fund’s primary objective is to target both Nasdaq and over-the-counter listed equities, while maintaining a 25% or more tilt toward the technology sector. The focus on OTC-listed stocks allows FOCPX to hold more small- and mid-cap companies, along with some foreign companies that do not list on major exchanges.
Practically speaking, though, the current iteration of FOCPX resembles a concentrated large-cap growth fund with just 157 holdings. The top holdings include all the Magnificent Seven stocks, with the exception of Tesla, along with a 2.9% allocation to Taiwan Semiconductor Manufacturing Co. Ltd. (TSM). It has a relatively high portfolio turnover rate of 37% and a fairly pricey 0.73% expense ratio.
10-year annualized return: 17.1%
Fidelity Blue Chip Growth Fund (FBGRX)
One of the best-performing Fidelity funds, FBGRX is also one of the firm’s oldest. Launched in 1987, this actively managed fund holds a portfolio of blue-chip stocks, which Fidelity defines as “well known, well established and well capitalized.” It features a moderate 22% turnover rate and a 0.47% expense ratio, which is fairly reasonable for active management. FBGRX has been managed by Sonu Kalra since 2009.
FBGRX is one of those rare funds that has consistently managed to outperform its benchmark. Over the trailing 10- and five-year periods, the fund has beaten both the Large Growth Morningstar peer category and the Russell 1000 Growth Index. From inception, the total return of FBGRX sits at an annualized 13%, whereas the Russell 1000 Growth Index has “only” returned 11.7% since 1987.
10-year annualized return: 17.4%
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.” While Fidelity offers FSCSX, it also has a more diversified alternative in FSPTX, which has been around since 1981.
FSPTX also tracks technology sector stocks but is broader compared to FSCSX. As a result, investors can also find consumer electronics companies like Apple and semiconductor manufacturers like Nvidia in this fund, along with the usual software companies like Microsoft and IT services companies like Cisco Systems Inc. (CSCO). The fund charges a 0.64% expense ratio and has a 43% turnover rate.
10-year annualized return: 20.3%
Fidelity Select Semiconductors Portfolio (FSELX)
The best-performing Fidelity fund of the past decade was FSELX, a reflection of the technology sector’s remarkable run. At the core of this success was surging demand for semiconductors, or the microchips that power virtually every modern electronic device, from smartphones and laptops to gaming consoles and medical equipment. In recent years, the semiconductor industry has gained even more momentum.
Artificial intelligence applications, for instance, rely heavily on advanced chips for training and running machine learning models, enabling innovations in everything from chatbots to autonomous driving. The Internet of Things has also fueled demand for semiconductors, as modern cars, smart appliances and industrial systems increasingly depend on chips for connectivity and functionality.
10-year annualized return: 26.6%
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8 Top-Performing Fidelity Funds for Retirement originally appeared on usnews.com
Update 11/25/24: This story was previously published at an earlier date and has been updated with new information.
