7 Best Fidelity Mutual Funds Of 2024 (2024)

The Best Fidelity Mutual Funds of January 2024

FundExpense Ratio
Fidelity 500 Index Fund (FXAIX)0.015%
Fidelity U.S. Sustainability Index Fund (FITLX)0.11%
Fidelity Mid Cap Index Fund (FSMDX)0.025%
Fidelity Nasdaq Composite Index Fund (FNCMX)0.30%
Fidelity Small Cap Value Fund (FCPVX)1.040%
Fidelity Corporate Bond Fund (FCBFX)0.45%
Fidelity Government Cash Reserves (FDRXX)0.34%

Fidelity 500 Index Fund (FXAIX)

7 Best Fidelity Mutual Funds Of 2024 (1)

Expense Ratio

0.015%

Dividend Yield

1.45%

10-Year Avg. Ann. Return

12.06%

7 Best Fidelity Mutual Funds Of 2024 (2)

0.015%

1.45%

12.06%

Why We Picked It

Fidelity 500 Index Fund can be the keystone of a diversified investment portfolio. It gives you exposure to the S&P 500, the benchmark index that commonly serves as a stand-in for the entire U.S. stock market. The index tracks 500 of the most important U.S. public companies.

FXAIX is a tech-heavy fund, with about 30% of its money at work in information technology stocks, including many of the best-known names in the industry. Yet this passively managed fund still charges a very low annual fee.

The bulk of FXAIX’s roughly 500 holdings are growth firms. Many professional managers generally consider most of its holdings high quality—stocks with above average growth, with strong prospects to keep delivering that.

FXAIX is more diversified than most of its peers. Its top-10 holdings represent roughly 30% of the fund. It has outperformed its Morningstar large-cap blend peer group over various multi-year time periods.

Fidelity U.S. Sustainability Index Fund (FITLX)

7 Best Fidelity Mutual Funds Of 2024 (3)

Expense Ratio

0.11%

Dividend Yield

1.12%

Avg. Ann. Return Since Inception (May 2017)

13.43%

7 Best Fidelity Mutual Funds Of 2024 (4)

Why We Picked It

Investors who strive to own companies that meet environmental, societal and governance metrics will appreciate the low annual fee and decent dividend yield offered by the Fidelity U.S. Sustainability Index Fund. Still, due to demands of the fund’s ESG benchmark index, prominent companies including Apple (AAPL), Amazon.com (AMZN) and Berkshire Hathaway (BRK.B) are not in this fund’s portfolio.

FITLX’s top 10 holdings make up more than one third of the total portfolio. This boosts the fund’s dependence on the performance of these names. Still, it’s otherwise diversified, with about 300 total holdings. It tilts toward large-cap stocks, while mid-cap stocks are a second favorite. Growth stocks are a clear preference.

The fund’s favorite sector currently is tech with roughly a quarter of its money at work there. Healthcare stocks, consumer discretionary and financial services are its next three favorite sectors. Shareholders looking for a fund that lets them invest in accord with their values, while receiving competitive returns and dividend yield while paying a relatively low annual fee, might consider FITLX.

Fidelity Mid Cap Index Fund (FSMDX)

7 Best Fidelity Mutual Funds Of 2024 (5)

Expense Ratio

0.025%

Dividend Yield

1.39%

10-Year Avg. Ann. Return

9.46%

7 Best Fidelity Mutual Funds Of 2024 (6)

0.025%

1.39%

9.46%

Why We Picked It

The Fidelity Mid Cap Index Fund has a gold-star rating from Morningstar, the research firm’s highest rating. It indicates the firm’s faith in FSMDX’s ability to outperform its peers over a typical market cycle.

FSMDX owns a mix of growth, value and core stocks, mainly in the mid-cap size range. Mid-cap stocks have a proven track record of outperformance. That comes from being smaller and more nimble than larger rivals.

The fund avoids the largest 200 U.S. stocks. With a portfolio of about 800 stocks, FSMDX is well diversified. Its top-10 stocks make up only about 5% of the fund. Morningstar projects that FSMDX’s earnings growth rate over the next five years will top its Morningstar category’s and its index’s. Industrials and technology are the fund’s largest sectors. Financial services, consumer cyclicals and healthcare are FSMDX’s next biggest.

Fidelity Nasdaq Composite Index Fund (FNCMX)

7 Best Fidelity Mutual Funds Of 2024 (7)

Expense Ratio

0.30%

Dividend Yield

0.67%

10-Year Avg. Ann. Return

14.62%

7 Best Fidelity Mutual Funds Of 2024 (8)

0.30%

0.67%

14.62%

Why We Picked It

Fidelity Nasdaq Composite Index Fund gives you access to well over 3,000 of the faster growing listings on the technology-heavy Nasdaq Compositeindex. In fact, nearly 50% of the fund is at work in information technology stocks. Marquee tech names Apple, Amazon.com, Microsoft (MSFT), Alphabet (GOOG), Tesla (TSLA) and Meta (META) are among its top 10 holdings.

FNCMX’s 10-year average annual return is the best of our Fidelity fund selections, but its heavy tech weighting makes it volatile. The bulk of the fund’s holdings are large-cap stocks. Growth stocks predominate. Clinging to its index keeps the fund’s annual turnover rate low and its annual fee reasonable. It has outperformed its Morningstar category over the past 10 years.

If you can handle the extra volatility, this fund is worth a look if you crave a successful growth-stock strategy.

Fidelity Small Cap Value Fund (FCPVX)

7 Best Fidelity Mutual Funds Of 2024 (9)

Expense Ratio

1.04%

Dividend Yield

0.61%

10-year Avg. Ann. Return

8.79%

7 Best Fidelity Mutual Funds Of 2024 (10)

1.04%

0.61%

8.79%

Why We Picked It

The Fidelity Small Cap Value Fund offers a timely strategic way to play the market. How so? Small-cap stocks as a group have outperformed large caps since 1926 in terms of average annual return. In addition, value stocks tend to outperform during bear markets and economic recessions. As a result, investors who think both the markets and the economy will be challenged this year might want a fund like FCPVX.

And no matter how the markets and economy behave this year, if you’re an investor who wants exposure to all corners of the market, FCPVX can be a good way to play small-cap valuefor the long run. The fund picks small-cap stocks that its managers believe are undervalued in terms of factors such as assets, sales, earnings, growth potential or cash flow.

FCPVX has outperformed the Russell 2000 Value Index and its Morningstar peer group’s average over the past one, three, five, 10 and 15 years. Note that the last time the fund paid a dividend was in December 2021, so investors seeking cash flow should look elsewhere. Still, this is a solid option for those who desire an actively managed small-cap value fund from a well-regarded fund family.

Fidelity Corporate Bond Fund (FCBFX)

7 Best Fidelity Mutual Funds Of 2024 (11)

Expense Ratio

0.45%

Dividend Yield

3.74%

10-Year Avg. Ann. Return

2.93%

7 Best Fidelity Mutual Funds Of 2024 (12)

0.45%

3.74%

2.93%

Why We Picked It

The Fidelity Corporate Bond Fund can fill a key niche in your portfolio. It offers diversification, counterbalancing the stock funds in your portfolio. It can also provide cash flow.

Bond funds have their own risks. A key one is that as interest rates rise, bond values decline. Still, after raising its interest rate to its highest point in decades, the Federal Reserve has signaled that it may soon pause hikes. Over the next few years, interest rates should fall, and that will provide patient investors with capital growth as the fund price increases.

FCBFX offers fixed income investorsbroad diversification. Roughly 70% of the fund’s more than 600 holdings are from U.S. issuers, the remainder from international issuers. More than 90% of the fund’s holdings are investment grade. Roughly 40% are rated A, AA or AAA. Corporate bonds make up roughly 90% of the portfolio.

Fidelity Government Cash Reserves (FDRXX)

7 Best Fidelity Mutual Funds Of 2024 (13)

Expense Ratio

0.34%

Dividend Yield

5.03% (7-day yield)

10-Year Avg. Annual Return

1.05%

7 Best Fidelity Mutual Funds Of 2024 (14)

0.34%

5.03% (7-day yield)

1.05%

Why We Picked It

Interest rates have soared. Currently, the fed funds rate is 5.25% to 5.50%, after 11 Federal Reserve interest rate increases since March 2022. Rising rates have enabled money market mutual funds like the Fidelity Government Cash Reserves to reward investors with better and better yields.

Meanwhile, the federal debt-limit dealhas erased the miniscule risk FDRXX faced from the potential risk of a Treasury default. Just around 32% of FDRXX’s portfolio consists of Treasury bills, coupons and strips. Lately, roughly 60% of FDRXX’s portfolio consists of repurchase agreements and government agency floating-rate securities. Repurchase agreements, or “repos,” are essentially loans for one or two days to the Federal Reserve, backed by collateral and the Fed’s creditworthiness. The Fed has its own money and is not bound by the Treasury’s statutory debt limit.

FDRXX is fractionally more conservative and stable than money market mutual funds that focus on short-term commercial debt. Amid uncertainty and volatility in the stock market, FDRXX can provide your portfolio with ballast.

*Data sourced from Morningstar Direct, current as of January 2, 2024, unless noted otherwise, such as portfolio composition from fund literature. FDRXX 7-day yield from Crane Data, current as of January 2. Returns since inception are through December 31, 2023.

Methodology

To harvest Forbes Advisor’s Best Fidelity Mutual Funds from among the hundreds offered, we screened for those with fees below 0.50%, Morningstar ratings of three stars or more and a minimum track record of 10 years. From that list we eliminated narrowly focused funds with niche asset classes or nontraditional investment strategies.

We stuck to popular investment categories, of interest to our readers. Our list includes U.S. stock and fixed-income funds. We screened out funds whose returns lagged their Morningstar category.

In our final list we included index and actively managed funds. We included funds that focus on stocks of various sizes as well as growth, value and core stocks. Due to the high interest rate environment, we added a money market mutual fund with superior yield to benefit investors who need access to their cash in the near term. It also has a low minimum initial investment of $1.

We favored lower fee funds with one exception. We included FCPVX, an actively managed, small-cap value fund. That fund gives readers a strategy for further diversifying their own portfolios.

You can use this Fidelity mutual fund list to build a well-diversified investment portfolio or to expand upon an existing one.

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Information provided on Forbes Advisor is for educational purposes only. Your financial situation is unique and the products and services we review may not be right for your circumstances. We do not offer financial advice, advisory or brokerage services, nor do we recommend or advise individuals or to buy or sell particular stocks or securities. Performance information may have changed since the time of publication. Past performance is not indicative of future results.

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As an avid investor with a strong background in financial markets and investment strategies, I can confidently discuss the concepts and principles underlying the article on the best Fidelity mutual funds of January 2024. Here's a breakdown of the key concepts and terms mentioned in the article:

  1. Expense Ratio: This is the fee charged by a mutual fund for managing and operating the fund. It's expressed as a percentage of the fund's average assets under management. Lower expense ratios are generally preferred by investors as they reduce the drag on returns over time.

  2. Dividend Yield: The dividend yield represents the annual dividend income per share divided by the price per share, expressed as a percentage. It indicates the return an investor can expect from dividends relative to the investment's price.

  3. Average Annual Return: This metric shows the average annualized return of a mutual fund over a specific period, such as 1 year, 5 years, or 10 years. It gives investors an idea of the fund's historical performance.

  4. Index Fund: An index fund is a type of mutual fund or exchange-traded fund (ETF) that aims to replicate the performance of a specific market index, such as the S&P 500 or Nasdaq Composite Index. These funds typically have low expense ratios because they passively track the index rather than employing active management.

  5. Actively Managed Fund: Unlike index funds, actively managed funds are overseen by portfolio managers who make investment decisions with the goal of outperforming the market or a specific benchmark index. These funds typically have higher expense ratios due to the active management involved.

  6. ESG (Environmental, Social, and Governance) Investing: This approach considers environmental, social, and governance factors alongside financial metrics when making investment decisions. ESG investors aim to support companies with positive social and environmental impact while seeking competitive financial returns.

  7. Mid-Cap Stocks: Mid-cap stocks represent companies with medium market capitalizations, typically falling between large-cap and small-cap stocks. They can offer a balance of growth potential and stability.

  8. Value Stocks: Value stocks are shares of companies that are considered undervalued relative to their intrinsic worth or fundamentals, such as earnings or assets. Investors in value stocks seek opportunities for capital appreciation as the market corrects its valuation.

  9. Growth Stocks: Growth stocks are shares of companies expected to grow at an above-average rate compared to other firms in the market. These companies often reinvest earnings into expanding operations rather than paying dividends, with the expectation of higher future profits.

  10. Corporate Bonds: Corporate bonds are debt securities issued by corporations to raise capital. Investors who purchase corporate bonds are essentially lending money to the issuing company in exchange for periodic interest payments and the return of the bond's face value at maturity.

  11. Government Bonds: Government bonds are debt securities issued by a government to finance its spending. They are typically considered lower risk compared to corporate bonds because they are backed by the government's ability to tax and print currency.

  12. Money Market Mutual Fund: Money market mutual funds invest in short-term, high-quality debt securities such as Treasury bills, certificates of deposit (CDs), and commercial paper. They offer stability and liquidity, making them suitable for investors seeking capital preservation and easy access to cash.

Understanding these concepts is crucial for investors looking to build diversified portfolios tailored to their financial goals and risk tolerance. Whether you're interested in passive index funds, actively managed strategies, or specialized thematic investments like ESG, having a grasp of these fundamentals will empower you to make informed decisions in the dynamic world of investing.

7 Best Fidelity Mutual Funds Of 2024 (2024)
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