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Recessions are one of the most feared economic catastrophes by the average investor. News from here and there would describe how the market is performing which will in turn affect the bonds and the money that we are already investing.
But did you know that there are strong, resilient funds in the market that you could put your investments on? When pandemics and economic recessions strike, it is important to engage and transact with the right financial funds available in the market. But what are the best ones out there? Let’s take a closer look as we discuss the different best funds to buy during economic recessions.
What Is a Fidelity Bond
Known as one of the largest managers of assets around the globe, Fidelity Investments (also simply known as Fidelity), is a corporation handling financial services. They are located in Boston, Massachusetts, and is highly reputable for actively-managed mutual funds.
Fidelity’s financial services also include those related to the issuance of retirement funds (including your 401k insurances) as well as handling individual retirement accounts (or IRAs). With diverse product categories, the world knows Fidelity’s products as the cheapest actively-managed funds in the market. No-load mutual funds also exist in their arena of products, and is something that is being looked forward to by a lot of investors amidst recession today.
Let’s tackle these different mutual funds in detail:
Three Categories of Fidelity Funds
While it is a popular notion that there are a lot of fidelity funds out there in the market, it is highly strategic to narrow down the best ones that would fit best for you. To do this, let’s divide this down to three different categories that Fidelity can offer best. These include the fidelity actively-managed fund; the Fidelity Index Funds; and Fidelity Balanced Funds. Let’s discuss each framework methodology one by one:
1) Fidelity Actively-Managed Fund
If you are like those investors who would want to witness long-term performances that can beat the relative index of the mutual fund, have unique characteristics that set them part from other funds in the list, and have a managerial tenure of at least five years, then the actively-managed funds should be for you.
2) Fidelity Index Funds
These types of funds are those that contain low-risk investment profiles and have a lower operational expense ratio. If you would want to have rather passively-managed investments, such as that for your s p 500 index mutual fund, without having to worry much about costs for fund managers, then these types of index funds will suit your interests better.
3) Fidelity Balanced Funds
For those investors who would like to put their money rolling for a wide array of investment profiles with a diverse financial portfolio, then the balanced funds is something you could choose. While some investors would want a personal finance advisor for these types of investments, the maintenance of your accounts for these funds can still be easily managed by oneself.
Choosing the Best Fidelity Funds According to Category
To choose which Fidelity funds would be the best for investors in this broad market, it is important to dissect each type of the following managed funds to not gain more information on how you could stay competitive in the market, but also to make your investing experience more cost-efficient in the long run. Let’s take a look at each:
Fidelity Actively-Managed Fund
When we say these funds are actively-managed, we mean it quite literally–you actively buy and sell your investment securities amidst market conditions of your choosing. For instance, we engage in the market when we think an actively-managed mutual fund will perform better than our S&P Index in the coming years, as compared to the index. But what are these various investment products, and how do they work?
1) Fidelity Contrafund (FCNTX)
The Contrafund is that type of investment that concentrates on value stocks and growth stocks. Most of these investments are large-cap, but still has a couple of mid-cap leveled stocks in the portfolio. The expense ratio for the FCNTX is at 0.82% which is a reasonable percentage, given the gains. Also, you wouldn’t have to put in a minimum investment amount.
2) Fidelity Strategic Dividend & Income (FSDIX)
Considered as a 5-star product, the FSDIX focuses in value stocks, while having the goals of yielding more income for its shareholders in the form of dividends. This can be very much suitable for those who are already retired and would want to purchase funds for income-related factors.
If you are not retiring anytime soon, this would still fit your interests perfectly if you would want long term-capital appreciation. No minimum initial capital is needed for this and it has a low expense ratio of 0.72%.
3) Fidelity Select Biotechnology Portfolio (FBIOX)
This fund gives more premium on the health sector and is investing in stock holdings that belong to such (bio-tech) sectors. This type is not recession proof and may indicate a market plunge sometimes. However, this has a huge potential for great appreciation, and is considered as an aggressive stock fund. This means if you don’t really pay much premium to the ups and downs in the broad market, then this portfolio will serve well for you.
The ratio for expenses for the FBIOX is at 0.72%.
4) Fidelity Growth Company (FDGRX)
Considered as a top performing and five-star mutual fund, this is one that gives concentration in large-cap stocks that have good potential for the above-average growth. There is no minimum capital needed for this, and has a ratio of operational expenses pegged at 0.85%.
Fidelity Index Funds
Fidelity has quite a number of the cheapest funds in the market economy. They offer investors more than 30 portfolios on index funds, and we’ll discuss three of their most-renowned passively managed products below:
5) Fidelity 500 Index Fund (FXAIX)
FXAIX is known to be one of the most beneficial S P 500 index funds in the market today. It has a very, very low expense ratio (pegged at 0.15%) which is the cheapest so far. FXAIX makes a very competitive core holding for long-term yield compensation and fixed income because it is exposed to more than 500 of the largest stocks in the country.
6) Fidelity U.S. Bond Index (FXNAX)
If you would want to get exposed to so many bonds and diversify your portfolio in the bond market, then the FXNAX would fit your needs perfectly. This competitively covers bond funds, bond prices, and the entire U.S. bonds market with just a ratio of expenses of 0.025%.
7) Fidelity Mid Cap Enhanced Index (FMEIX)
Are you looking for an outstanding mutual fund that can expose you to mid-cap stocks and stock prices in the stock market? Then you would want to purchase the Fidelity Mind Cap Enhanced Index (also known as FMEIX). This type of fund is focused on tracking the Russel Mid Cap Index which gives you the opportunity to get exposed to around 300+ stocks that belong to the middle capitalization category. Mid-cap stocks are widely known to have a greater yield and growth potential than the large-cap stocks, but you can expect to see some declines shortly along the way.
Because of this, the FMEIX is known to be an aggressive type of holding and will work perfectly for investors who would want to make money in the long term, and with a high risk tolerance.
The ratio for expenses for this index is pegged at 0.59% and you also won’t need to worry about a minimum initial purchase–because there isn’t any.
Fidelity Balanced Funds
On the other corner of the spectrum lie balanced funds–mainly because it balances all bonds, stocks, and cash. There are different types of balanced funds and this category can be strategic for investors who would want to put their capital in just one fund as a foundation as they build their portfolio around.
8) Fidelity Balanced (FBALX)
If you have a “middle” tolerance for risk, then the FBALX is one that will keep you in line. It has a relatively lower risk when compared to that of 100%-contained stocks, but the yields for this is something that you can happily expect. The ratio of expense for the FBALX is at 0.53%, and without any minimum initial purchase required.
9) Fidelity Freedom Income (FFFAX)
An investment advisor would say that if you are those types of people who are rather conservative with their funds, then the FFFAX will work perfectly for you. This is because it preserves your principal cash regardless of the economy, while providing income. In other words, if you are more interested in keeping your account balance rather than mainly growing it, then with FFFAX you may attain your goals.
The Fidelity Freedom Income Balanced Funds do not need a minimum capital purchase and only has expense ratios pegged at around 0.47%.
10) Fidelity Capital & Income (FAGIX)
An investment advice given to those who would not just want to maintain their principal but would also want to achieve growth and income in the stock market, then the Fidelity Capital & Income will fit you perfectly. It can withstand a great recession as it comprises 20% stock and 80% bond funds in the allocation.
Because of this 20-80 allocation, it will pose you higher risks than bond funds, but lower than a stock fund. However, returns in the long run are a lot higher than most of the bond funds.
The FAGIX has a justifiable expense ratio pegged at 0.69%, and just like the two other balanced funds discussed above, the minimum initial purchase for investing is at $0.00.
We know that nobody gets exempted when a pandemic or when recessions strike our economy and the stock market. Market conditions decline, and sometimes we worry about investing money and bonds.
This is why the key to surviving such a recession is to become economically resilient by getting information about the right type of funds we would want to focus our investing on. While market timing is important, the type of funds where you put your money on is still an important consideration.
The Fidelity funds mentioned above are those that can surely serve as an investing buffer for investors like you during the toughest of times–even recessions.