The exchange-traded fund (ETF) industry is on the verge of a major shift, which some experts are calling a “floodgate” moment.
The Securities and Exchange Commission (SEC) is currently reviewing applications from several fund managers seeking approval to offer ETF share classes of their existing mutual funds. While Vanguard has long used this structure under a now-expired patent, no other firms have been permitted to adopt it yet.
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If the SEC gives the green light, it would mean that more mutual fund families — not just Vanguard — could access the same in-kind creation and redemption mechanics that make ETFs more tax efficient. This process allows ETF managers to meet investor flows without triggering taxable capital gains distributions, something traditional mutual funds have historically struggled with.
Still, some firms like Fidelity Investments remain focused on their core lineup of mutual funds, many of which have been around for decades and manage billions in assets.
Investors continue to find value in both sides of Fidelity’s offering: active funds with long-term outperformance from seasoned managers, and passive index funds that are low-cost, commission-free and easy to automate with recurring contributions.
Here are seven of the best Fidelity mutual funds to buy and hold:
| Fund | Expense ratio |
| Fidelity Total Market Index Fund (ticker: FSKAX) | 0.015% |
| Fidelity 500 Index Fund (FXAIX) | 0.015% |
| Fidelity Zero Total Market Index Fund (FZROX) | 0% |
| Fidelity Zero International Index Fund (FZILX) | 0% |
| Fidelity Magellan Fund (FMAGX) | 0.56% |
| Fidelity Blue Chip Growth Fund (FBGRX) | 0.47% |
| Fidelity Contrafund (FCNTX) | 0.63% |
Fidelity Total Market Index Fund (FSKAX)
“Savvy investors understand the importance of keeping your costs low and your options open, and Fidelity funds have become popular because they offer just that,” says Andrew Mark Latham, a certified financial planner and director of content at SuperMoney.com. “With no sales loads, low fees and no minimum investment requirements, it’s easier to start investing without breaking the bank.”
Broad-market index funds like FSKAX allow investors to own the entire U.S. stock market with a single investment. This fund tracks the Dow Jones U.S. Total Stock Market Index, which currently spans more than 3,800 small-, mid- and large-cap domestic stocks across all 11 sectors. Fidelity has offered this fund since 1997 and over the years the expense ratio has dropped steadily to what is now just 0.015%.
Fidelity 500 Index Fund (FXAIX)
“While it truly depends on each individual investor’s specific goals and objectives, I typically advocate for index funds in the accumulation phase, as these give great broad-market exposure with lower fees than actively managed funds,” says Wes Moss, managing partner and chief investment strategist at Capital Investment Advisors. A popular alternative to FSKAX is FXAIX, which tracks the S&P 500.
This Fidelity fund also indexes U.S. equities, but with a focus on just 500 large- and mid-cap companies selected based on size, liquidity and earnings consistency, subject to a committee review. However, because FXAIX is still market-capitalization weighted, the top holdings for this fund are virtually identical to FSKAX. FXAIX has been trading continuously since 1988 and currently charges a 0.015% expense ratio.
Fidelity Zero Total Market Index Fund (FZROX)
“Fidelity introduced zero-expense-ratio index mutual funds and also offered zero-minimum-investment mutual funds, no minimums to open an account and no account fees for retail brokerage accounts,” Moss says. These special zero-expense-ratio mutual funds come from Fidelity’s “Zero” lineup, which uses a combination of three strategies to completely eliminate fund fees for investors.
For example, FZROX starts by tracking the Fidelity U.S. Total Investable Market Index, which cuts down on index licensing fees typically associated with external benchmarks like the S&P 500. Instead of buying and holding every single stock in the index, FZROX employs a sampling technique to cut down on transaction costs. Finally, FZROX can lend securities to generate income, which further offsets expenses.
[Read: 7 Best International Stocks to Buy Now]
Fidelity Zero International Index Fund (FZILX)
“International investing can be a great diversifier for investors who are too heavily concentrated in U.S. stocks,” says Henry Yoshida, senior vice president of Retired.com. “With FZILX, you can invest internationally at zero cost — this is a win-win for any serious long-term investor.” This can help investors avoid the back-end fees of American depositary receipts (ADRs) or currency conversion costs.
As with FZROX, FZILX employs the same strategy of proprietary index, sampling and securities lending to reduce fees to zero. However, it tracks an entirely different segment of the stock market via the Fidelity Global ex U.S. Index. This currently comprises more than 2,200 stocks from both developed and emerging-market countries weighted by market capitalization.
Fidelity Magellan Fund (FMAGX)
Investors aiming to beat the market can consider an active fund like FMAGX, as long as they’re comfortable with higher fees and the potential for underperformance. FMAGX has a legendary history, once led by famed manager Peter Lynch, whose “buy what you know” and “growth at a reasonable price” approach helped the fund deliver outsized returns during his tenure.
After Lynch retired the fund struggled, with some managers accused of “closet indexing” — holding portfolios too similar to the benchmark. But since taking over in February 2019, current manager Sammy Simnegar has delivered strong results. His large-cap growth focus has returned 17.8% annualized over the past three years, outperforming both the S&P 500 and the Morningstar large growth category.
Fidelity Blue Chip Growth Fund (FBGRX)
FMAGX isn’t the only standout active fund in Fidelity’s lineup. A strong alternative is FBGRX, which targets stocks that Fidelity defines as “well-known, well-established and well-capitalized.” Launched in 1987, FBGRX now carries a lower 0.47% expense ratio and has outperformed the Russell 1000 Growth Index on an annualized basis over the trailing 10-, five- and three-year periods.
Much of that success is credited to portfolio manager Sonu Kalra, who has led the fund since 2009. Kalra focuses on companies with above-average earnings growth and sustainable business models, favoring those with durable competitive advantages, pricing power and experienced management teams. The current composition of FBGRX’s technology-heavy portfolio reflects his views on growth investing.
Fidelity Contrafund (FCNTX)
FCNTX is one of Fidelity’s most successful active mutual funds, having outpaced both the S&P 500 and the Morningstar large growth peer group by a wide margin over the trailing 10-, five- and three-year periods, even after accounting for a 0.63% expense ratio. The fund is still led by William Danoff, who has managed it since 1990 with a style that favors strong management teams and free cash flow.
Danoff’s approach is very much “go anywhere, own anything,” and he’s not afraid to take concentrated, high-conviction positions that differ markedly from the S&P 500. As of now, nearly 16% of the fund is allocated to Meta Platforms Inc. (META), and another 10% to Berkshire Hathaway Inc. (BRK.A). To prepare for a transition, Fidelity appointed two co-managers in April to help manage succession risk.
[READ: 7 Best Long-Term ETFs to Buy and Hold]
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The 7 Best Fidelity Mutual Funds to Buy and Hold originally appeared on usnews.com
Update 06/09/25: This story was previously published at an earlier date and has been updated with new information.
