The Top 9 Fidelity Funds for Retirees

What is a Fidelity Fund?

Fidelity Investments is a financial services corporation based in Boston, Massachusetts. Managing thousands of assets all over the world, Fidelity is most known for offering its clients outstanding fund portfolios that cover mutual funds and all its asset classes, allowing you to utilize a mix of funds for a more tactical and better investment. The most popular ones include actively-managed funds, no-load mutual funds, exchange-traded funds, and of course retirement plans. 

Fidelity funds that are most suitable to cater to one’s retirement plans usually include broad market, low expense ratio ETFs, which by popular opinion, are the best way to invest for almost everyone out there.

How Do I Choose Which Fidelity Funds to Avail?

Fidelity is an incredibly successful and excellent corporation in the field of financial services. Naturally, it offers a wide variety of mutual funds, all high in quality. So when it comes to buying your own Fidelity fund, you can’t help but ask—among all these first-rate funds, which one shall I choose?

Well, for starters, it would be of great help if you are aware of the kind of fidelity fund that you want. We have broken down for you the three kinds of fidelity funds, categorized by the manner of long-term performance, diversity and expense ratio, and balance.

3 Categories of Fidelity Funds

1)   Actively-Managed Funds:

These kinds of funds involve the active buying and selling of portfolio investments by the manager however they choose. More often than not, this is usually done in order for the fund to beat a relative index and may hopefully outperform, say, the S&P 500 index in more years, eventually resulting in a better return in the long run.

2)   Index Funds

Index funds are the kind that include portfolios of stocks that match the components and performance of a benchmark index. Whereas an actively-managed fund may outperform an index, an index fund mimics its benchmark index no matter what the state of the markets is. Fidelity offers some of the most affordable index funds.

3)   Balanced Funds

A balanced fund is a kind of mutual fund that covers several components including a stock component, a bond component, and other kinds all in one portfolio. This kind of fund balances between growth and income, equity and debt. A balanced fund is ideal for those who wish to invest in a single fund with a well-grounded core holding.

The 9 Best Fidelity Funds for Retirees

Here are some of the best Fidelity funds in which to invest that will ensure the likelihood that your nest egg will be ready to hatch upon your retirement years.

1. Fidelity OTC Portfolio

The Fidelity OTC Portfolio fund is categorized as Morningstar under large-growth. 80 percent of the fund’s portfolio is usually invested in stocks traded on over-the-counter markets, including the Nasdaq composite index, and more than 25 percent of the fund is usually invested in the technology sector.

In 2017, under the fund’s former manager, Gavin Baker, the OTC Portfolio held 296 positions (including Apple Alphabet and Amazon), with 46 percent of the portfolio’s value consisting of its 10 largest holdings. With new managers, Sonu Kalra and Chris Lim, the overall fund assets is recorded to have a total of almost $24.87 billions worth of assets invested in 175 separate holdings as of October 20, 2020.

Category placements are ranked from the first to the one-hundredth percentile–placements from the first percentile being the best and placements going towards the one-hundredth percentile being the worst. As of January 31, 2018 the Fidelity OTC Portfolio has placed in the eighth percentile for the trailing twelve months and in the first percentile in the trailing ten years.

If this fund has piqued your interest and you feel you’d like to invest in it, you’d be pleased to know that the Fidelity OTC Portfolio’s expense ratio is only 0.81 percent, classified by Morningstar as below average. It requires no 12 b-1 fee, and asks for an initial investment of $ 2,500.

2. Fidelity Blue Chip Growth Fund

This fund is for those who aim for long-term capital growth, with 80 percent of its assets invested in blue-chip stocks.

Managed by Sonu Kalra, this fund is predicted for above-average and less volatile returns in the long run, with investors reporting positive long-term results. Over the past year, the fund has seen a return of 58.29 percent, 26.19 percent in the past three years, 22.7 percent in the past five years, and 19.13 percent in the past ten years.

Two-thirds of the fund’s holdings are invested in the sectors of technology and consumer cyclical sectors.

The Fidelity Blue Chip Growth Fund has a total of assets reaching almost $41.02 billions, which is invested in 422 holdings and has an expense ratio of 0.78. Investors in this fund usually hold stocks in the Dow Jones Industrial Average or blue chips, most of the time in individual retirement accounts, allowing them to make a fruitful profit.

3. Fidelity NASDAQ Composite Index Fund

The Fidelity Nasdaq Composite Index Fund offers its investors returns that match the performance of the Nasdaq Composite Index, investing at least 80 percent of its assets in the index’s common stocks.

In terms of performance, over the past year, the Nasdaq Composite Index Fund has a return of 40.54 percent, 20.77 percent in the past three years, 20.40 percent in the past five years, and 17.91 percent in the past ten years.

For interested investors, this fund has a 0.29 percent expense ratio and an above-average risk to other funds according to Morningstar.

4. Fidelity 500 Index Fund

This fund mimics the performance of the S&P 500 index, a benchmark for U.S. stocks. 

The Fidelity 500 Index Fund can be very advantageous for an investor as it does not focus on one industry, its investments are placed in diverse sectors. As a result, it can survive volatility.

The fund is recorded to have a total of assets reaching almost $252.11 billion invested in 508 holdings. In the past year, the fund is recorded to have a return of 15.14 percent, 12.27 percent in the past three years, 14.14 percent in the past five years, and 13.73 in the past ten years. The Fidelity 500 Index Fund has a 0.02 expense ratio.

5. Fidelity Total Market Index Fund

Investors for the Total Market Index Fund will benefit from broad exposure in the stock market. This fund holds more than 3,000 sticks but for a low cost. This way, the fund can act as a core fund for portfolios that aim for broad exposures.

As of October 20, 2020, the Total Market Index Fund is recorded to have a total of assets of almost $49.48 billion invested in 3,404 holdings, its top stocks including Apple Inc., Exxon Mobil Corp., Microsoft Corp., Johnson & Johnson, and General Electric Co.

In terms of performance, this particular fund has outperformed more than 80 percent of its peers in the last decade. Although this fund may experience greater declines than the actively-managed funds during market selloff, its volatility has not had any major changes and has remained about the same.

In the past year, the fund is recorded to have a return of 14.76 percent, 11.54 percent in the past three years, 13.62 percent in the past five, and 13.43 percent in the past decade.

The Total Market Index has a 0.02 percent expense ratio.

6. Fidelity Growth Strategies Fund

The Fidelity Growth Strategies Fund is perfect for investors who seek capital appreciation. This fund focuses on companies that are deemed to potentially provide growth in revenue and expedited earnings — mostly investing in medium-sized companies and domestic and foreign issuers.

Over the past year, the fund has a recorded return of 22.78 percent, 15.15 percent in the past three years, 1.28 in the past five, and 12.88 percent in the past ten.

7. Fidelity Extended Market Index Fund

For investors who wish to have a total exposure to the U.S. stock market, the Fidelity Extended Market Index Fund offers additional opportunities, the fund holding smaller domestic stocks, which includes larger names that are not included in the S&P 500 Index.

The fund mimics the performance of its benchmark, so its returns have been in line with the index. As investors do not need to pay large management fees in index funds, they tend to pocket a greater percentage of fund returns compared to other funds.

The fund holds a total of almost $24.92 billion worth of assets invested in 3,102 holdings as of October 20, 2020 and a return of 11.24 percent within the past five years, and 12.05 percent in the past ten years.

The fund has a 0.05 percent expense ratio.

8. Fidelity Real Estate Investment Port

The Fidelity Real Estate Investment Port is for people who wish to achieve an income of above-average and long-term capital growth.

Usually, 80 percent of its assets are put into investments that are related to real estate. It is non-diversified and invests in both foreign and domestic issuers.

In the past year, the fund has a recorded return of -14.40 percent, 1.75 percent in the past three years, 4.94 percent in the past five, and 8.52 percent in the past ten.

9. Fidelity Balanced Fund

The Fidelity Balanced Fund offers its investors a wide variety of investments balanced between stocks and bonds.

The fund has a recorded total of assets reaching almost $36.9 billion invested in 2,224 holdings. It has a portfolio holding positions in 1,828 securities, including Autodesk, Apple, Alphabet, and many others.

As of mid-November 2017, according to Morningstar, the fund has placed in the tenth percentile for the last 12 months, ninth for the past three years, sixth in the past five, and in the twenty-first percentile in the past ten years.

In the past year, the fund has given a return of 17.81 percent, 10.76 percent in the past three years, 11.27 percent in the past five, and 10.37 in the past ten. 

The fund has an expense ratio of 0.53 percent.

Check out here for the 10 Best Fidelity Low Risk Funds.

Why Should One Invest in Fidelity Funds?

The stock market may seem quite confusing and fickle. There are plenty of factors that one must consider. However, with enough knowledge in the field and with the right assistance, you have plenty to gain in investing in Fidelity funds designed for retirement plans. Just keep an open mind and remember to invest responsibly. Plenty of opportunities await you!

If you seek further assistance and insight in choosing and acquiring the right stocks, you may visit Investorialist’s website. They offer an outstanding service at a very affordable cost.

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