How Do We Review Brokers
NerdWallets comprehensive review process evaluates and ranks the largest U.S. brokers by assets under management, along with emerging industry players, using a multifaceted and iterative approach. Our aim is to provide an independent assessment of providers to help arm you with information to make sound, informed judgements on which ones will best meet your needs.
DATA COLLECTION AND REVIEW PROCESS
We collect data directly from providers, and conduct first-hand testing and observation through provider demonstrations. Our process starts by sending detailed questionnaires to providers to complete. The questionnaires are structured to equally elicit both favorable and unfavorable responses from providers. They are not designed or prepared to produce any predetermined results. The questionnaire answers, combined with product demonstrations, interviews of personnel at the providers and our specialists hands-on research, fuel our proprietary assessment process that scores each providers performance across more than 20 factors. The final output produces star ratings from poor to excellent . Ratings are rounded to the nearest half-star.
RATING FACTORS
FACTOR WEIGHTINGS
The weighting of each factor is based on our teams assessment of which features are the most important to consumers and which ones impact the consumer experience in the most meaningful way. The factors considered, and how those factors are weighted, change depending upon the category of providers reviewed.
Vanguard Total Bond Market Index Admiral Shares
VBTLX is the biggest bond fund in the world. When you own shares, you have insight to the entire sphere of the U.S. bond market. This includes more than 10,000 bonds.
The fund invests about 40% in corporate bonds and 60% in U.S. government bonds of all maturities. These include short-, intermediate-, and long-term issues.
Fidelity High Dividend Etf
Expense Ratio: 0.29%
This is one of the best Fidelity ETFs for investors seeking an above-average stream of equity income. The Fidelity High Dividend ETF proves as much with a trailing 12-month distribution yield of 4.04%, or almost double the dividend yield on the S& P 500.
Many high dividend strategies are heavily allocated to sectors, such as real estate and utilities, that are inversely correlated to Treasury yields, explaining why some high dividend ETFs slumped last year. While FDVV finished 2018 lower, the Fidelity ETF was significantly less bad than the two largest high-yield dividend ETFs in 2018.
FDVV devotes over 18% of its weight to tech stocks and just 0.55% to consumer staples names . Last years steadiness was meaningful as this Fidelity ETF is the best-performing domestic large-cap high dividend ETF to start 2019.
As of this writing, Todd Shriber did not hold a position in any of the aforementioned securities.
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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.
Fidelity Us Bond Index Fund
- Fund category: Intermediate core bond
- Assets under management: $60.5 billion
- SEC yield: 1.5%
- Expenses: 0.025%
Fidelity U.S. Bond Index Fund is a low-cost mutual fund that seeks to track the Bloomberg U.S. Aggregate Bond Index. This can allow for diversified exposure to the U.S. bond market in 2022.
Index funds are not the typical “go-to” bond fund for rising rate environments. But a low-cost fund like FXNAX could work well in 2002 for long-term investors who use dollar-cost averaging or investing a set amount of money, regardless of the market price in their portfolios.
If inflation and rising rates play out in a way that many analysts and finance talking heads expect for 2022, bond prices could see more downside pressure. This could be especially true in the first and second quarters, as the Fed’s hand is forced to continue tapering down its asset purchase program and also to raise rates by mid-year.
As the bond market saw in 2013’s “taper tantrum,” and a similar event in 2018, prices fell in response to shifting Fed policy, and we could see that again in 2022. Although these events are foreseeable, they’re still difficult to predict with accuracy.
Assuming bond prices fall in 2022, or there’s short-term price volatility, a smart way to approach bonds in the year is to dollar-cost average into a passively managed bond index fund. And if your plan is to do so, the lower the expense ratio, the better.
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What Is A Fidelity Bond
Fidelity Investments commonly referred to as Fidelity is a financial services company based in Boston, Massachusetts. Fidelity is among the top global asset management companies in the world, known for its specialty in no-load actively managed mutual funds. They also offer Individual Retirement Accounts , and 401 retirement plans. Fidelity funds cover all mutual fund asset classes, from domestic to specialized sectors.
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 funds 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.
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How We Make Money
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
Bonds Vs Bond Funds: Which Is Right For You
Should I own individual bonds or bond mutual funds?
Its a question were asked frequently, especially by those worried about the effects of rising interest rates. If youre not familiar with the ins and outs of each option, it can be hard to decide what is best for your needs.
There are pros and cons to each approach, and which option is best for you comes down to your personal investment goals, including your time horizon and risk tolerance.
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Money Market Mutual Funds
These mutual funds own safe securities such as cash and very short-term debt, making them generally safer than either stock- or bond-based mutual funds but also lower-return. That said, unlike FDIC-backed money market accounts at a bank, money market mutual funds can lose principal, meaning its possible, though not likely, that you wont get your whole investment back.
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.
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T Rowe Price Global Multi
- Fund category: World bond USD hedged
- Assets under management: $1.8 billion
- SEC yield: 2.9%
- Expenses: 0.64%
T. Rowe Price Global Multi-Sector Bond Fund makes our cut for one of the best bond funds for 2022 because of its actively managed, “go anywhere” style that provides shareholders with far-reaching opportunities.
When yields are low and the prices for domestic bonds are looking to be under pressure in 2022, active management with broad diversity and the potential for high yields looks attractive. PRSNX pays off on all fronts in this regard, albeit with higher risk from lower credit-quality bonds.
With a 30-day SEC yield of 2.9% and 12-month return of 0.89% through Nov. 30, 2021, PRSNX was well ahead of the iShares Core U.S. Aggregate Bond ETF yield of 1.5% and 12-month return of -1.33%. And 2022 is not likely to look too different from 2021 with regard to low yields and low- to below-zero returns for funds that hold U.S. bonds.
Slightly more than half of PRSNX’s portfolio is invested in foreign debt instruments, with most of the rest in U.S. bonds, and convertible debt making up a tiny remaining sliver. Most of its bonds are government and corporate debt, and mortgage-backed and asset-backed securities.
Included in its top 10 issuers , which make up 33% of the portfolio’s holdings, are Germany, China, Chile and Hungary.
Invest Well By Keeping Things Simple
You dont need a lot of mutual funds or exchange-traded funds to build a solid portfolio.
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My friends are smart and hard-working. And, much to my chagrin, most of them have no interest in personal investing.
Yes, it can be confusing. Ads for new products and services are everywhere new personal finance apps pop up all the time and entities ranging from financial planners and traditional investment firms to robots want to offer you advice for a fee.
No wonder most of the people I know feel overwhelmed. They think about investing the way I do about eating leafy green vegetables: Even though they dont like it, its something they have to do.
Occasionally one of my buddies will ask me for guidance. A friend, who says she really didnt understand her financial advisers advice, handed me her brokerage statement and asked for suggestions. She promised to carry them out, as long as I kept things simple and kept her investments diversified.
No pressure.
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Is Fidelity Right For You
Fidelity is the rare broker that’s able to serve both active traders and retirement investors alike. The company brings it on every level, starting with a mutual fund selection that stacks up to any other broker and even includes free offerings. But Fidelity also offers features that matter to stock traders, including strong trading platforms, zero trade commissions and a wide range of research offerings. We can’t think of an investor who won’t be well-served by Fidelity.
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.
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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.
Best Fidelity Funds For Retirees: Fidelity Capital & Income
Expenses: 0.75%, or $75 annually for every $10,000 investedMinimum Initial Investment: $2,500
We kick off our list of Fidelity funds for retirees with one of Fidelitys highest rated funds, Fidelity Capital Income Fund .
FAGIX is a balanced fund that seeks to provide a combination of income and growth, which is an objective at the core of smart retirement investing. The portfolio accomplishes this objective with an asset allocation of roughly 80% bonds and 20% stocks.
The bond mix consists primarily of high-yield corporate debt and the equity side includes mostly large-cap stocks, such as Skyworks Solutions Inc , Alphabet Inc and HCA Holdings Inc .
FAGIX could work well as a core holding in a retirement portfolio or as a complement to other holdings.
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Should You Hold A Bond Fund
There are two prerequisite issues we need to get out of the way before we get started. The first is whether you should hold bonds at all. We’re not going to discuss that today, but if you are unclear on this issue, I would recommend these posts:
The second issue to address is whether or not you should use a bond fund at all. I think bond mutual funds are a great way to own bonds. They provide:
However, there is an alternative. You can simply own the individual bonds yourself. Some people like to do this because it guarantees that when the bond matures you will get back all of your principal and all of the interest due, at least in nominal terms. I generally think this is a terrible idea for corporate bonds and a bad idea for municipal bonds. Diversification and liquidity in both of these categories is well worth the additional cost of a good bond fund. With treasury bonds a better argument can be made to purchase them individually, particularly if you are buying them in a taxable account directly without fees from TreasuryDirect. However, that’s a pretty tiny percentage of investors who want to buy individual treasuries and want to buy them in a taxable account.
So before we move on, let’s assume that you, like me, actually want to own bonds and actually want to own them in the form of a bond fund.
Should You Invest In A Total Bond Market Index Fund
Index fund investing benefits from lower fees than buying actively managed mutual funds. Lower costs result in better after-fee returns over the long term. Thats true with fixed income investments as well as equities.
SP Global tracks the relative performance of actively managed funds compared to their respective benchmark across a number of asset classes. Its latest report shows that actively managed funds were more likely to underperform their respective index over one-, three- and five-year periods. Morningstar has reported similar results.
There are at least two important considerations beyond performance that investors should keep in mind. First, the duration of the funds in our list hover around six years. Duration helps us understand how much the value of a fund will rise or fall with interest rates. Generally, for each 1% rise or fall in interest rates, a funds value will rise or fall by a percentage equal to its duration.
Assuming a fund with a six-year duration, an increase in rates of 1% will cause the funds value to decline by about 6%. A decrease of 1% in the prevailing rates will cause the funds value to increase by about 6%. Given the historically low interest rate environment and the recent rise in yields, you need to consider the interest rate risk associated with a total bond index fund.
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Pros And Cons Of Fidelity Mutual Funds
Weigh the pros and cons of Fidelity mutual funds before you commit to purchase. For a more in-depth look at Fidelity, read Benzingas Fidelity Investments Review.
Pros of Fidelity Mutual Funds
- Low fees: Fidelity mutual funds often rival the low-fee options of Vanguard or Charles Schwab. For example, Fidelitys S& P 500 index fund carries a 0.015% net expense ratio and there is no minimum investment requirement. Vanguards S& P 500 mutual fund carries a 0.14% net expense ratio.
- Strong management: The Johnson family, which has been guiding Fidelity for over 70 years, has made some home run hires in Lynch and Danoff. Fidelity is a name investors trust.
- Variety of investment options: Fidelity offers mutual funds in every corner of the market. As of this writing, 288 mutual funds are open to new investors, including some which track real estate and commodities benchmarks. Even risk-averse investors have options with money market and bond funds.
Cons of Fidelity Mutual Funds
Which Bonds To Choose
However, some bonds and bond funds are safer than others.
Retirees should aim to hold only high-quality bonds, advisors said. That means generally avoiding junk bonds and choosing those of investment-grade caliber, advisors said.
That’s because junk bonds often move in tandem with stocks. They’re issued by companies or governments at higher risk of defaulting on their debt and incapable of repaying investors during a recession or if the stock market tumbles, advisors said.
Retirees who want exposure to junk bonds should use money earmarked for stocks and not bonds, Benz said.
One general approach to bond investing is to allocate a third of the bond portfolio to each of three categories: U.S. Treasury bonds, corporate bonds and mortgage-backed securities, according to Charles Fitzgerald, CFP and principal at Moisand Fitzgerald Tamayo.
Allocating to municipal bonds may also make sense, especially for high-income retirees with a taxable brokerage account, given their tax advantages, Fitzgerald said.
But retirees are better off buying investment-grade bonds, which are issued by entities with a high credit rating, he said. For example, Standard & Poor’s investment-grade ratings include AAA, AA, A, and BBB.
Aside from bond type and credit quality, retirees should also consider duration when buying a bond fund, Fitzgerald said. That refers to the average time it takes for the fund’s bond holdings to mature .
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