Investors are often obsessed with finding the best mutual fund, but even with thorough research, picking a winner ahead of time is extremely difficult. Survivorship bias means investors only see the funds that survived, not the many that were shut down after poor performance. Past results do not guarantee future performance, and can sometimes be misleading.
But perhaps the biggest issue is that investors are also generally terrible at timing their entry and exit points, even when they correctly identify a highly successful fund in its prime.
A good example is the Fidelity Magellan Fund (ticker: FMAGX), managed by Peter Lynch from 1977 to 1990. During that period, the fund delivered an annualized total return of roughly 29% before taxes. For context, many estimates place the long-term, pre-tax, pre-inflation return of the S&P 500 at around 10%.
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Sustaining that level of outperformance over more than a decade was extraordinary, and Lynch achieved this using a blend of two approaches.
One was “buy what you know,” where he paid close attention to everyday products and services, including insights drawn from his wife’s regular consumer experiences. The other was growth at a reasonable price, where he emphasized metrics like the price-to-earnings-to-growth ratio.
Despite those results, it has been widely reported that the average investor in the Fidelity Magellan Fund actually lost money during Lynch’s tenure. That disconnect comes down to behavior.
Numerous studies show that investors’ money-weighted returns consistently lag the time-weighted returns of the funds they own. In practice, this means investors tend to buy after periods of outperformance, when a fund becomes popular, and panic sell after periods of underperformance.
This herding behavior, combined with poor market timing, explains why even great mutual funds can produce disappointing outcomes for the investors who own them.
So, if you are looking for the ideal Fidelity mutual fund to buy and hold, it makes sense not to fixate on historical performance or try to guess which manager will be the next Peter Lynch.
Instead, focus on factors that are more closely tied to long-term outcomes, such as low expense ratios, broad diversification and tax efficiency. These are generally found in index funds.
“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.
Here are seven of the best Fidelity mutual funds to buy and hold in 2026:
| Fund | Expense ratio |
| Fidelity Magellan Fund (FMAGX) | 0.56% |
| Fidelity Contrafund (FCNTX) | 0.63% |
| Fidelity Blue Chip Growth Fund (FBGRX) | 0.61% |
| Fidelity 500 Index Fund (FXAIX) | 0.015% |
| Fidelity Total Market Index Fund (FSKAX) | 0.015% |
| Fidelity Zero Total Market Index Fund (FZROX) | 0.00% |
| Fidelity Zero Large Cap Index Fund (FNILX) | 0.00% |
Fidelity Magellan Fund (FMAGX)
Fidelity Magellan is still around. While it no longer carries the same aura it did during the Lynch era, it remains one of Fidelity’s flagship funds, with roughly $36.4 billion in total net assets. The fund has been managed by Sammy Simnegar since 2019, but performance has continued to lag. Over the past five years, FMAGX has delivered an annualized return of 11.4%, which trails the S&P 500 at 14.4%.
A major headwind has been costs. Passive S&P 500 index funds are now available with expense ratios as low as 0.015%, while FMAGX charges 0.56%. The fund’s higher annual portfolio turnover rate of about 45% also matters. That level of trading increases the likelihood of year-end capital gains distributions, which can create an additional tax drag for investors holding the fund in taxable accounts.
Fidelity Contrafund (FCNTX)
One actively managed Fidelity fund that has not struggled to keep up is FCNTX. Over the trailing 10-, five- and three-year periods, the fund has outperformed both the Morningstar Large Growth peer category and the S&P 500. It continues to be managed by William Danoff, who has been at the helm since 1990, though two co-managers were added last year.
While FCNTX began as a more explicitly contrarian fund, it now leans toward large-cap growth stocks. The portfolio currently holds 446 positions, with the top 10 accounting for 51.2% of total assets. Like most active funds, it is not cheap, carrying a 0.63% expense ratio. That said, its turnover rate of roughly 20% is lower, which can help reduce the size and frequency of taxable capital gains distributions.
Fidelity Blue Chip Growth Fund (FBGRX)
FBGRX is another Fidelity active fund that has managed to stay ahead of its benchmarks. It has been managed by Sonu Kalra since 2009 and focuses on large-cap companies he believes have above-average earnings growth potential paired with durable business models. A core part of the process involves identifying situations where the market may be mispricing the pace or durability of growth.
Kalra’s stock-picking strategy also focuses on identifiable catalysts such as new product cycles, management changes or turnaround efforts. To that end, competitive advantages and pricing power are central considerations. Despite the drag from a 0.61% expense ratio, FBGRX has returned 19.5% annually over the last 10 years, outperforming the Russell 1000 Growth Index at 18.1%.
Fidelity 500 Index Fund (FXAIX)
The long-running S&P Indices Versus Active study has shown that over the past 15 years, roughly 88.3% of large-cap active funds underperformed the S&P 500. That large-cap category includes actively managed Fidelity funds such as FMAGX, FCNTX and FBGRX, which helps put their results into context. Outperformance exists, but statistically, it is the exception rather than the rule.
If you would rather invest with the odds on your side, FXAIX is a straightforward alternative. This Fidelity mutual fund tracks the S&P 500 for a very low 0.015% expense ratio, which works out to about $1.50 per year on a $10,000 investment. It offers broader diversification, with the top 10 holdings accounting for about 39.2% of assets, and it is highly tax-efficient thanks to a turnover rate of just 2%.
[Read: 5 ETFs That Outperform the S&P 500]
Fidelity Total Market Index Fund (FSKAX)
The S&P 500 is often treated as a proxy for the entire U.S. stock market, but it is more curated than many investors realize. Beyond eligibility rules tied to size, liquidity and earnings history, index changes are also influenced by a committee process that determines which companies are added or removed. FSKAX takes a broader approach. The fund tracks the Dow Jones U.S. Total Stock Market Index.
FSKAX’s benchmark includes more than 3,800 stocks across large-, mid- and small-cap segments, making it a more representative slice of the investable U.S. equity market. Like most index funds, it is market-cap weighted, so mega-cap technology companies still dominate the top holdings. FSKAX carries the same low 0.015% expense ratio as FXAIX and also maintains a tax-efficient turnover rate of just 2%.
Fidelity Zero Total Market Index Fund (FZROX)
An expense ratio of 0.015% is already inexpensive, but Fidelity went a step further with its Zero fund lineup. As the name suggests, these funds charge a true 0% expense ratio and also come with no minimum investment requirement. Fidelity achieves this by using proprietary indexes rather than third-party benchmarks from S&P Global or MSCI, which cuts down on licensing fees.
FZROX tracks the Fidelity U.S. Total Investable Market Index and holds just over 2,500 stocks. While that is fewer than FSKAX, the difference comes from sampling rather than full replication, a technique used to reduce transaction costs. The fund also participates in securities lending to help offset operating expenses. In practice, FZROX serves as Fidelity’s zero-cost equivalent to FSKAX.
Fidelity Zero Large Cap Index Fund (FNILX)
For investors looking for a zero-cost alternative to FXAIX, FNILX fills that role. The fund tracks the Fidelity U.S. Large Cap Index, which targets the largest 500 U.S. companies by market capitalization. While it is similar in composition to the S&P 500, it does not apply the same committee-based selection process. Instead, it uses a rules-based approach and sampling to keep costs down.
Performance for FNILX has historically been similar to the S&P 500, but because it tracks a different index, it is considered substantially different for tax purposes. That distinction allows FNILX to potentially serve as a tax-loss harvesting partner for investors holding an S&P 500 fund, meaning an investor could sell one fund at a loss and buy the other to maintain market exposure without triggering a wash sale.
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The 7 Best Fidelity Mutual Funds to Buy and Hold originally appeared on usnews.com
Update 01/26/26: This story was previously published at an earlier date and has been updated with new information.
