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Best Fidelity Funds in 2021


2021 list of the best Fidelity mutual funds with top Morningstar ratings. 3 best performing Fidelity mutual funds for IRA/brokerage account investors in the last 10 years: Fidelity Select Biotechnology Portfolio (FBIOX), Fidelity NASDAQ Composite Index Fund (FNCMX), and Fidelity Contrafund (FCNTX). Fidelity Target Retirement Funds.



Best Fidelity Funds Overview


In the mutual fund world, Fidelity Investments stands at or near the top in terms of assets under management, number of funds offered, and reputation. There are more than 200 Fidelity Funds to choose from, so finding a fund that suits your investment needs is easy. Finding a fund that also outperforms most or all of its competitor funds is much more difficult. Here are the top 3 best-performing Fidelity Funds over the past 10 years. The list has been filtered to show those with at least a four-star rating from Morningstar, a minimum investment of $2,500, lower-than-average expense ratios when compared to peers, no upfront transaction fees, a fund history of at least 10 years, and a fund manager who has managed the fund for at least 10 years.

Screening for 10-plus years of the same manager running the fund shows how that manager performed during the bear market in 2008-2009 as well as the past five years of bull market with occasional corrections.





Fidelity Select Biotechnology Portfolio (FBIOX)


It is not surprising that a technology fund is the top Fidelity performer over the last 10 years. Biotechnology in particular is quite volatile, but can produce far above average returns if stocks are carefully selected. The fund invests in companies that engage in biotechnological products, services, and processes. The fund may also invest in companies that benefit directly from biotechnology in some way.

FBIOX normally invests at least 80% of its assets in these types of companies, and usually invests in common stocks, but may purchase other investments. The stocks tend to be mid-sized growth-oriented companies.

The fund's 10-year annualized return is 21.21%. It outperformed its benchmark indices and more than doubled the performance of the S&P-500 Index. The expense ratio is a low 0.72%. It has earned a four-star rating from Morningstar and ranks in the top 2% of funds in its category. It should be noted that FBIOX charges a 0.75% fee if shares are sold within 30 days of purchase.


Best Fidelity Funds



Fidelity NASDAQ Composite Index Fund (FNCMX)


FNCMX is a passively-managed index fund that invests in the common stocks of the Nasdaq Composite Index, which is composed of the stocks of more than 5000 domestic and international companies that are listed on the Nasdaq Stock Market. Normally the fund is fully invested, but it may hold up to 20% cash or cash equivalents. Volatility will be higher than average because Nasdaq stocks are generally small or medium sized.

With index funds, expense ratios are vitally important, because passively-managed index funds are investing in the same portfolio of stocks and holding those stocks. Total returns won't vary much because the funds are not trading in and out or buying stocks outside the index. All other factors being equal, the index funds with the lowest expense ratios will outperform those with high expense ratios.

The fund's 10-year annualized return is 18.31%, only 17 basis points below its benchmark index despite a net expense ratio of 0.30%. The expense ratio is about 75% lower than its benchmark's average expense ratio. It should be noted that FNCMX has a 0.75% fee if shares are sold within 90 days of purchase. There is also a 0.06% 12b-1 distribution fee.

FNCMX has earned a five star rating from Morningstar and ranks in the top 10% of funds in its category.


Best Fidelity Mutual Funds


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Fidelity Contrafund (FCNTX)


FCNTX is a true contrarian fund whereby the manager looks for undervalued stocks and buys those stocks deemed likely to return to their full and fair valuation in the future. The fund invests in large-cap stocks—those with market values greater than $10 billion and with growth potential through price appreciation rather than dividend income. The fund may invest in both domestic and foreign companies.

FCNTX had a 10-year annualized return of 15.48% compared with its benchmark S&P 500 Index of 10.80%. The expense ratio is 0.85%, which is about a third lower that of the average expense ratio of its peers. It has earned a five-star rating from Morningstar and ranks in the top 16% of all funds in its category. There are no 12b-1 or redemption fees.


Best Fidelity Mutual Fund





Best Fidelity Target Retirement Funds. Fidelity Asset Allocation Mutual Funds in 2021


Best Fidelity Asset Allocation Funds


Target-dated funds have become quite popular in recent years as the Baby Boomers age into retirement. It's no surprise that Fidelity Investments, one of the giants in the brokerage business, offers a full complement of mutual funds that target certain retirement dates. Below are the top four Freedom Index mutual funds based on 5-year performance.

All of Fidelity's Target Index funds invest a certain percentage of assets into one of four Fidelity funds, each in a different asset class, and adjusts the asset allocation as the target date draws near. Data is from the Fidelity and Morningstar websites unless otherwise stated. All four funds have a $2500 minimum initial investment. Net expense ratios for all funds are 0.16%.







Fidelity Freedom Index 2050 Fund (FIPFX)


It is not surprising that one of the longer-dated funds has the best return over the past five years, thereby garnering the top spot of Fidelity's Targeted Index funds. With a long time horizon, a targeted retirement fund can and should invest more heavily in stocks, which have handily outperformed bonds over the past five years.

The four funds that comprise the 2050 fund's portfolio (and the 2045, 2040, and 2035 funds as well) are the Spartan Total Market Index Fund-Class F (FFSMX), the Fidelity Series Commodity Strategy Fund- Class F (FCSFX), the Fidelity Series Global Ex-U.S. Index Fund (FSGEX), and the Spartan U.S. Bond Index Fund-Class F (FUBFX).

As of 2021, the allocations in the fund were as follows: 61.63% in FFSMX, 1.38% in FSGEX, 26.59% in FFSMX, and 10.40% in FUBFX. Although three of these four funds are index funds, each Target Index fund is actively managed. The fund manager makes allocation decisions regularly, since the Fidelity Target Index funds don't seek to replicate any particular benchmark index.

Conservative investors who shy away from commodities should note that a commodity fund, FCSFX, is a small part of this portfolio and can be quite volatile over both the short and long term. The five-year annualized return for the 2050 Fund is 11.02% compared with its category average of 10.01%.


Fidelity Freedom Index 2050 Fund (FIPFX)


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Fidelity Freedom Index 2045 Fund (FIOFX)


FIOFX is composed of the same four Fidelity funds that comprise the 2050 fund- FFSMX, FCSFX, FSGEX, and FUBFX. The difference in performance is no doubt due to asset allocation differences from several years ago that affected each fund differently.

With the target dates of both FIPFX and FIOFX in the distant future, 30-35 years out, identical asset allocation is not surprising, since long-term goals for that length of time are similar. The 2045 fund scored just below the Fidelity 2050 fund with an 11.02% annualized return over the past five years.


Fidelity Freedom Index 2045 Fund



Fidelity Freedom Index 2040 Fund (FBIFX)


With a 25-year time frame until an investor in this fund might plan to retire, the 2040 fund is still weighted heavier in stocks than bonds. Its portfolio allocation is virtually identical to both the 2045 and 2050 funds. The five-year annualized return of the 2040 fund is 11.01%.


Fidelity Freedom Index 2040 Fund (FBIFX)


Summary


Targeted retirement-date mutual funds are relatively new but becoming increasingly popular. They promote the concept of one fund, set-it-and-forget-it retirement planning. Purchase the fund with the appropriate target retirement date and let the fund managers adjust the portfolio as the years pass. The risk of this approach is that history doesn't always repeat itself and long-term return differences between stocks and bonds may vary from the norm, which may cause an automatic rebalancing strategy based on years to retirement to underperform.

However, if simplicity is the primary concern, target retirement funds should be high on an investor's watch list. As with all mutual funds, the key is to find funds with low expenses and competent management. Also, make sure to understand the long-term strategy of the fund. Not all follow the same formulas for investment allocation. Fidelity's target index funds have all earned Morningstar Analyst Ratings of Silver, which means they are likely to outperform their peers in the future.


Best Fidelity Funds Summary


Fidelity offers one of the largest numbers of mutual funds of any fund family, and has two solid actively-managed funds which have proven to be consistent outperformers — Select Biotechnology Portfolio and Contrafund. Any serious investor should consider Fidelity funds when making their mutual fund investment decisions.





Fidelity Brokerage Overview

While Fidelity offers excellent brokerage services, it clearly has stiff competition. TD Ameritrade would be a better choice for investors who need advanced trading technology, while Firstrade is a great option for fund traders. Ally Invest is ideal for investors interested in retirement trading.


Fidelity Highlights


Fidelity charges $0 to buy any of its more than 200 proprietary mutual funds. Fidelity also doesn't charge a commission to buy a non-Fidelity No Transaction Fee (NTF) fund. They do charge a commission of $49.95 to sell these funds if they are held less than 2 months. Considering that Fidelity offers more than 3,500 NTF funds, an investor can effectively invest in mutual funds through Fidelity for no cost.

Most online brokers offer certain NTF funds, so investors need to check each broker's website to determine if the mutual fund they wish to purchase will cost them a commission.


Fidelity Account Maintenance and Annual Fees


The trend with online brokers is toward no fees for account maintenance and inactivity, and Fidelity is competitive with most brokers at $0 for both account maintenance and inactivity. There are no annual fees at Fidelity.

Only Wellstrade and Vanguard assess these fees. Vanguard waives its $20 annual account maintenance fee if a minimum balance in its funds and/or ETFs of $50,000 is maintained, or if electronic delivery of statements and other information is elected.


Fidelity IRA Setup and Annual Fees


As with other fees, the trend in IRA fees is toward zero. Fidelity charges no setup or annual fees for regular IRAs, either Traditional or Roth. Vanguard will charge its $20 annual fee for IRA accounts only if the account balance is below $50,000 in Vanguard funds or ETFs, or if the investor has not chosen to receive statements and other information electronically.


Investment Research


Fidelity offers in-depth research for stocks, ETF’s, options, and mutual funds. Customers have access to free stock and ETF reports from Zacks, Morningstar, S&P Capital IQ, Thomson Reuters, and others.

Fidelity has a virtual learning center where investors will find videos, articles and webinars on a wide range of financial topics.


Conclusion


For the most part, the answer to a question "Are Fidelity Fees High?" is the following: Fidelity offers competitive commissions and fees when compared to the Big Six online brokers. The free trading they offer in their proprietary mutual funds and NTF funds offsets their nominal weakness in mutual fund commissions. Investors should determine what types of investments they intend to trade as well as what fund or ETF families they intend to trade in order to make a wise choice of broker. But Fidelity, being one of the giants and offering many advantages in addition to competitive pricing, is worthy of consideration by all investors.

For investors looking for the best commissions and fees Ally Invest are clearly much more attractively priced than Fidelity for mutual fund investors and options traders and matches it in stocks and ETFs pricing.






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