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Mutual funds and all things concerning the stock market are still perceived with intimidation by non-investors and investors alike. But in actuality, it can be an investment venture with a higher chance of yielding the best possible results. If one educates themselves about mutual funds’ specifics, the profit returns may prove this fund efficient.
First, some of the complex terms one needs to grasp in the concept of mutual funds are dividends, stocks or shareholdings, and market capitalization.
What is a Mutual Fund?
To simply put, it is a collection of money invested in various assets or commodities such as stocks, bonds, securities, equities, and others. Some of these assets or a combination of them can be found in a stock fund portfolio. This stock fund portfolio is then actively managed by a professional fund manager. A fund manager is an expert investment advisor that also manages the different activities in a portfolio that you have acquired, including rebalancing stocks, determining dividend yield, stock allocation, depositories, and more. Hence, investors are encouraged to select the ideal option based on their financial strategies and profit return goals.
Investing firms like Fidelity offers the best low-cost mutual funds investment options and some other types of Fidelity growth company investment services to accommodate and provide a satisfactory user experience.
Before we go over and discuss the top rated or the 7 best Fidelity Mutual Funds worth investing in, here are some important terms investors should know:
A stock is an ownership of the company’s investor on its earnings and assets.
Stock embodies two types:
1. Preferred – No voting rights but in possession of larger ownership on assets of the company
2. Common – Have voting rights but reduced ownership on assets of the company
Portion of the company’s profit assets for the investor.
Market Capitalization – Market Cap:
Market Cap = The amount of the company’s outstanding shares or the current market price for a single shareholding
For Example: If a company’s outstanding shares is $10 million and the cost per share is $100, then Market Cap is around = $10 million * $100 = $1 Billion
Companies classified as:
- Large Cap (> $10 billion)
- Mid Cap ($2 – $10 billion)
- Small Cap ($300M – $2B)
Why Fidelity Funds?
Fidelity Funds is a mix of funds that cover all asset classes of mutual funds, from domestic equity to specialized sectors with transparent and minimal costs. If you are planning to invest in the long run, it is important to keep those qualities in mind.
In the words of Scott San Emeterio, Founder and CEO of BallStreet Trading, “If your strategy is to buy and hold, the importance of a transparent and low-cost basis cannot be understated.”
7 Best Fidelity Funds to Buy and Invest
1. Fidelity Blue Chip Growth K6 Fund (FBCGX):
Stocks of highly reputed companies that are financially stable for years are popular for high dividend yielders.
FBCGX, in short, is considered one of the safe fidelity select funds as it concentrates allocation of at least 80% on tech and consumer discretionary sectors. March 2020 recovery lows show the focus on select names like Amazon.com, Apple, Microsoft Corp., and Facebook with an initial investment ratio of 0.45%
U.S has ranked FBCGX as No.17 in large growth with a performance of 59.48% revenue over a year and 25.91% over the past three years.
Fees: Below average
Risk: High risk, according to the Morning star.
2. Fidelity ZERO Large Cap Index Fund (FNILX):
As the name implies, FNILX has a 0% expense ratio, which banishes the fear of long-term investors’ cost. FNILX is the best option for the buy and holds investors as it has a 3% holdings turnover ratio. In FNILX, at least 80% of the fidelity fund are invested in Large Cap companies with Large Cap index funds. FNILX obtained a remittance of 17.12% over the last year.
3. Fidelity ZERO International Index Fund (FZILX):
FZILX is one of the best fidelity funds options, including a zero expense ratio for a buy and hold investor. It provides exposure to foreign markets beyond the U.S. as it aims to reflect the total returns of foreign and emerging markets. Top holdings include Nestlé SA (NSRGY), Tencent Holdings (TCEHY), and Alibaba Group Holding, where they have proven to be one of the best fidelity funds in a short period.
4. Fidelity Freedom Blend 2050 Fund (FHAPX):
FHAPX is a target-date retirement savers fund (401 k plans) with an asset allocation goal on growth and income and high current income. It is the blend of Fidelity Large Cap Value Index Funds, the Fidelity International Growth Fund and the Fidelity Investment Grade Bond Fund, and other Fidelity Funds. FHAPX has a 1.79% current yield and a 0.55% expense ratio. Assets are allocated based on a neutral asset allocation strategy adjusted over time, similar to 10 to 19 years after the year 2050, to reach allocation of a similar sort to the Fidelity Freedom® Blend Income Fund.
5. Fidelity Total Market Index Fund (FSKAX):
FSKAX is a large blend of index funds. Fidelity invests in top-performing common stock funds with huge growth potentials such as Amazon and Alphabet (GOOG, GOOGL). For an investor who plans *in* investing *to* the total stock funds, FTKAX can help as it offers a 0.01% expense ratio and has returned 13.68% to the investors over a period average of 10 years.
6. Fidelity Capital & Income Fund (FAGIX):
FAGIX could be appropriate for dividends as it focuses on income and capital growth via investments in equity and debt securities. It is categorized as a high-yield bond with a credit rating below investment grade. A higher rate of interest compensates high risk. FAGIX has an expense ratio of 0.74%
Best suited for Investors looking *for a* high dividend yield and who can take high risk.
7. Fidelity Flex U.S. Bond Index Fund (FIBUX):
It provides steady interest payment and lower risk.
The speculation looks to give venture results comparing the aggregate price and interest performance of the debt securities in the Bloomberg Barclays U.S. Aggregate Bond Index funds.
FIBUX has provided a three-year return of 5.38% and a yield of 2.45% with a 0% expense ratio. Investors also need to take note that it has 85% holdings turnover ratio.
How to Buy Shares in a Mutual Fund?
Now that we have understood a mutual fund and the top-rated fidelity funds to invest in, let’s move forward to the next question: how to purchase mutual funds fidelity shares?
As a first-time investor, one is advised to directly buy mutual funds from the company or service broker or online discount broker. But one must remember to keep an eye on the fees and the expense charged.
Investors must keep an eye on the mutual fund company’s website to know its goal, stock holdings, fund managements, quarterly return rates chart, and overall composition chart. Not to forget the fees and expense rates.
Online Brokers help compare different competitive companies, that analyzes the risk ratings and other information.
After this, the next question to answer is when to purchase mutual funds fidelity shares?
Mutual fund shares do not oscillate throughout the day. Instead, after the market closes, it calculates the net asset value (NAV). Hence, one can buy mutual funds only at the end of the trading day.
Annual expense ratio = % of investment and other fees like load fees.
Mutual Funds: Pros and Cons
Advantages of Mutual Funds:
- Advanced Portfolio Management- Fees paid by the investor is used to employ a portfolio manager to buy and sell stocks.
- Dividend Reinvestment- Helps in *the* initial investment growth as the investor gets dividends and other income for the fund.
- Risk Reduction (Safety)- Reduced risk as its investment diversified in various securities.
- Convenience and Fair Pricing- Eliminates price fluctuation by allowing trade only after closing the NAV.
Disadvantages of Mutual Funds:
- High Expense Ratios and Sales Charges- Investors must be aware not to exceed a 1.20% expense ratio as it is unduly expensive.
- Management Abuses – It is prone to churning, turnover, and window dressing that may lead to unnecessary trading and excessive renewals.
- Tax Inefficiency – Investors receive distributions from the uncontrollable funds regarding taxable dues to turnover, redemptions, gains, and losses in security holdings.
- Poor Trade Execution – Should an investor trade before the NAV cut off time, they will only be presented with the closing NAV price.
Acquiring fidelity mutual fund shares are primarily recognized as an investment option with considerably lower risks and cheaper assets.
However, low costs do not usually mean it’s the best option. Some other factors can still influence your entire investable. Wise selection and investors’ discretion are still required to guarantee general growth for your investment capital.If you still seek more information on the subject of mutual funds, Fidelity contrafund, or Fidelity mutual funds, consider contacting us at Investoralist to receive further comprehensive and thorough details and statistics.