7 Best Fidelity Mutual Funds: Which One Is Right for You?
Fidelity has a long history with mutual funds, tracing its roots back more than 70 years when it was founded as Fidelity Management & Research Company. Today, Fidelity employs more than 350 researchers worldwide and offers over 250 mutual funds that together cover about 2,300 stocks. So which of its funds are the best? Learn more in this guide to the best Fidelity mutual funds.
Why Invest In a Fidelity Mutual Fund?
Fidelity manages more than $2.2 trillion in assets and works with over 28 million investors, most of whom are getting a decent return on their money. In 2020, 16 Fidelity mutual funds won a total of 26 U.S. Lipper Fund Awards for outperforming peers based on risk-adjusted, consistent returns. With Fidelity, you can purchase a range of funds with a single investment. They’re typically affordable, professionally managed and designed to meet different investment goals.
Its mutual fund offerings include but aren’t limited to the following:
- Actively managed funds: These funds have one or more managers who take a hands-on approach to maximize returns.
- Freedom Funds: These are target-date funds designed to get more conservative as you get closer to retirement.
- Asset Manager funds: With these funds, you determine the percentage you want in stocks based on your risk tolerance and goals.
- Index funds: These funds track a specific stock index and tend to have lower management fees.
You can choose domestic or international mutual funds, as well as funds based on specific industry sectors or personal priorities like environmental sustainability.
What Are the Best Fidelity Mutual Funds?
The best Fidelity mutual funds for 2021 represent a wide range of companies and feature consistent performance and billions in assets. Keep reading to learn more.
1. Fidelity Blue Chip Growth K6 Fund (FBCGX)
One of the best Fidelity mutual funds for long-term growth, FBCGX focuses on well-known and established companies with above-average growth potential. The fund also has a low expense ratio, which means you won’t lose much in fees.
- Dividend yield: 0.08%
- Expense ratio: 0.45%
- Asset size: $5.4 billion
- YTD return: 10.00%
This fund’s major holdings include Amazon, Apple, Alphabet (the parent company of Google), Facebook and Tesla. It’s a popular choice in retirement plans, so it might be the best Fidelity 401(k) plan fund to invest in.
2. Fidelity Fund (FFIDX)
Established in 1930 by Fidelity founder Edward C. Johnson, FFIDX is still strong enough to be one of the best Fidelity mutual funds for 2021. It’s actively managed and heavily invested in companies with a history of consistent growth, with a focus on long-term growth.
- Dividend yield: 0.49%
- Expense ratio: 0.48%
- Asset size: $4.9 billion
- YTD return: 4.18%
The fund’s holdings include Microsoft, Apple, Amazon, Visa and Adobe.
3. Fidelity Contrafund (FCNTX)
The investment philosophy of this fund is to find companies with prospects that are brighter than reflected in their stock prices. By researching companies and buying them before the rest of the market realizes their potential, this growth fund seeks high capital returns for investors.
- Dividend yield: 0.00%
- Expense ratio: 0.85%
- Asset size: $110.3 billion
- YTD return: 4.47%
This actively managed fund is one of the best Fidelity mutual funds to buy now, and it’s been overseen by the same manager since 1990. Its holdings include Amazon, Facebook, Berkshire Hathaway and Netflix.
4. Fidelity Select Software and IT Services Portfolio (FSCSX)
One of the best performing Fidelity mutual funds over the past three years, FSCSX focuses on companies engaged in the research, design, production and distribution of software and other IT-based services. It’s an actively managed fund with average annual returns of 23.60% over three years and 20.95% over 10 years.
- Dividend yield: 0.53%
- Expense ratio: 0.71%
- Asset size: $11.7 billion
- YTD return: 5.38%
As you’d expect for one of the best Fidelity mutual funds for 2021, this fund has major holdings in high-profile tech companies such as Microsoft, Salesforce.com, Alphabet, Oracle, PayPal and Adobe.
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5. Fidelity Select Health Care Portfolio (FSPHX)
Employment of healthcare workers is expected to grow faster than any other occupational group this decade, according to the Bureau of Labor Statistics. That means this could be one of the best mutual funds to invest in for 2021. It’s an actively managed fund that has been under the same management for over a decade.
- Dividend yield: 0.52%
- Expense ratio: 0.70%
- Asset size: $10.4 billion
- YTD return: 6.74%
This fund has holdings in some of the biggest names in healthcare, including UnitedHealth Group, Cigna, Humana, Lilly, Regeneron Pharmaceuticals and AstraZeneca.
6. Fidelity ZERO Large Cap Index Fund (FNILX)
Expense ratios can eat into your earnings over time. This Fidelity fund offers a 0.0% expense ratio, which means more money for you. The goal of the fund is to mimic the returns of the 500 largest U.S. companies. That means it’s not actively managed like other funds, but the trade-off might be worthwhile if you’re looking to save.
- Dividend yield: 1.20%
- Expense ratio: 0.00%
- Asset size: $3.06 billion
- YTD return: 4.31%
This fund’s holdings include Johnson & Johnson, Apple, Procter & Gamble and Tesla.
7. Fidelity Balanced Fund (FBALX)
While no mutual fund is risk-free, one of the safest Fidelity mutual funds is this balanced fund. About 60% of its holdings are in stocks, with the rest in bonds and other debt securities. It has an average return over three years of 11.71%, which means it’s steadily growing even with a lower level of risk than other mutual funds.
- Dividend yield: 1.23%
- Expense ratio: 0.52%
- Asset size: $31.7 billion
- YTD return: 4.17%
This fund has holdings in Apple, Microsoft, Amazon and Facebook.
Should You Invest In a Fidelity Mutual Fund?
There’s a Fidelity mutual fund for every type of investor, whether you prefer low fees, balanced funds or a focus on specific sectors. Fidelity is well established and offers its customers more than 70 years of experience. Plus, its website and research tools make it easy to get started.
Fidelity mutual funds are an excellent way to start or expand your portfolio, giving you a chance to save for a home, educational expenses or a retirement nest egg.
Brian Hill contributed to the reporting for this article.
Data is accurate as of Feb. 10, 2021, and is subject to change.
This content is not provided by Fidelity. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by Fidelity.
This article has been updated with additional reporting since its original publication.