Picking the best mutual fund for a long-term buy-and-hold strategy is less about guessing which geography, sector or market cap will outperform and more about minimizing the ways Wall Street and the government chip away at your gains.
Most funds charge fees, the largest of which is the expense ratio. This is the percentage of assets under management deducted annually for management fees and operating costs. For example, on a $10,000 investment, a 0.05% expense ratio costs $5 a year, while 0.50% costs $50. As your investment grows and the years pass, this drag adds up.
Some fund families still charge sales loads, which are one-time fees paid to buy or sell shares. A front-end load means you pay when you buy, while a back-end load means you pay when you sell. Others may tack on 12b-1 fees, which cover marketing and distribution costs. These don’t benefit you directly and instead go to intermediaries.
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Taxes take another bite. Distributions from a mutual fund are taxable, with rates depending on the type of income, such as dividends or interest. Capital gains distributions are even trickier. They are common in high-turnover active funds where managers frequently swap holdings. If a manager sells appreciated securities, you can get hit with a taxable distribution in December even if you didn’t sell shares.
The good news is that all of this is avoidable if you know what to look for, and Fidelity Investments’ mutual fund lineup is a great place to start.
“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.”
Here are seven of the best Fidelity mutual funds to buy and hold:
| Fund | Expense ratio |
| Fidelity 500 Index Fund (ticker: FXAIX) | 0.015% |
| Fidelity Total Market Index Fund (FSKAX) | 0.015% |
| Fidelity Zero Large Cap Index Fund (FNILX) | 0% |
| Fidelity Zero Total Market Index Fund (FZROX) | 0% |
| Fidelity Zero International Index Fund (FZILX) | 0% |
| Fidelity Large Cap Value Index Fund (FLCOX) | 0.035% |
| Fidelity Large Cap Growth Index Fund (FSPGX) | 0.035% |
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 option is FXAIX, which tracks the S&P 500 index.
FXAIX’s benchmark provides exposure to 500 of the largest U.S. companies, screened for liquidity and earnings quality by both a rules-based methodology and committee input. The fund spans all 11 stock market sectors, but is weighted toward technology. Fidelity offers FXAIX at a rock-bottom 0.015% expense ratio, and its low portfolio turnover rate of 3% minimizes taxable capital gains distributions.
Fidelity Total Market Index Fund (FSKAX)
Investors who already own FXAIX may want to keep FSKAX on their watch list. This Fidelity mutual fund also tracks U.S. stocks but uses a different benchmark. Instead of the S&P 500, it follows the Dow Jones U.S. Total Stock Market Index, which is more diversified, with over 3,800 holdings, and includes many more mid- and small-cap stocks. However, FSKAX’s top holdings still resemble those of FXAIX.
This is because both funds are market-cap weighted, meaning the largest companies make up the biggest share of the portfolio. As a result, historical performance has been similar despite the different benchmarks, making them a good tax-loss harvesting pair. The fund also has a low 0.015% expense ratio and a tax-efficient 3% turnover rate, along with a lengthy track record dating back to 1997.
Fidelity Zero Large Cap Index Fund (FNILX)
“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. Investors willing to skip brand-name benchmarks like the S&P 500 may find Fidelity Zero funds such as FNILX a cheaper alternative. This fund is one of few to have a 0% expense ratio.
FNILX offers large-cap U.S. market-cap weighted exposure, tracking the proprietary Fidelity U.S. Large Cap Index, which holds the largest 500 stocks and avoids licensing fees. It further cuts costs by sampling the index instead of fully replicating it and offsets expenses by lending securities to short sellers. Historically, this fund has delivered returns competitive with the S&P 500.
Fidelity Zero Total Market Index Fund (FZROX)
With Fidelity Zero funds, the company focused on core portfolio building blocks rather than niche sector or country-specific strategies. That means you won’t find Zero options for specialized markets, but you can expect versions that mirror Fidelity’s established index funds. For total U.S. market exposure broader than the large-cap-focused S&P 500, Fidelity offers FZROX, the zero-fee counterpart to FSKAX.
Instead of licensing a Dow Jones index, FZROX uses the proprietary Fidelity U.S. Total Investable Market Index, which includes over 2,600 holdings spanning small- and large-cap stocks. Like other Zero funds, it relies on sampling and securities lending to remove expenses. The ultra-low 1% annual turnover rate further limits the size and frequency of taxable capital gains distributions.
[Read: How to Pay Taxes on Investment Income]
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 fund provides exposure to international stocks without American depositary receipt (ADR) currency conversion fees.
FZILX tracks the Fidelity Global ex U.S. Index, which focuses on large- and mid-cap stocks from both developed and emerging markets. This approach can help investors reduce home-country bias in U.S.-heavy portfolios and add exposure to regions and sectors that may be underrepresented, such as financials and industrials. Many of the fund’s international holdings trade at lower valuations.
Fidelity Large Cap Value Index Fund (FLCOX)
One longstanding trend in the fund industry is higher fees for specialized strategies. However, some of Fidelity’s index funds buck this trend. A good example is FLCOX, which offers a portfolio of more than 800 U.S. value stocks at a 0.035% expense ratio. It tracks the Russell 1000 Value Index, which screens for companies with lower price-to-book ratios and lower expected growth rates.
FLCOX has some overlap with the S&P 500 but leans more toward old-economy sectors like financials, industrials and health care. Its emphasis on blue-chip holdings such as Berkshire Hathaway Inc. (BRK.B), JPMorgan Chase & Co. (JPM) and Exxon Mobil Corp. (XOM) puts it firmly in the large-cap value style box. The fund is slightly less tax efficient than broad market index funds, with a 14% turnover rate.
Fidelity Large Cap Growth Index Fund (FSPGX)
Fund families are often predictable in their offerings. If a firm offers a technology sector fund, it usually has similar options for the other sectors. Likewise, if it has a value style fund, it tends to have a growth counterpart. For Fidelity, that role is filled by FSPGX, which tracks the Russell 1000 Growth Index. This benchmark is basically the opposite of the Russell 1000 Value Index in terms of screens used.
The Russell index methodology currently limits single-stock weights to 22.5% and ensures that the combined weight of all positions above 4.5% stays under 45%, helping reduce concentration risk. Even so, technology accounts for 51% of FSPGX’s portfolio, and 58.6% of the fund’s weight is concentrated in the top 10 holdings. However, the fund remains inexpensive, at a 0.035% expense ratio.
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The 7 Best Fidelity Mutual Funds to Buy and Hold originally appeared on usnews.com
Update 08/14/25: This story was previously published at an earlier date and has been updated with new information.
