The Best Performing Fidelity Funds For Retirement


A Diverse Selection Of The Best Mutual Funds Fidelity Has To Offer


Fidelity Investments is a financial services business based in Boston, Massachusetts. It is one of the largest asset managers in the world and is best known for its actively managed, no-load mutual funds. It also offers financial services for retirement plans, such as 401s and individual retirement accounts .

Fidelity has dozens of low-cost, top-performing mutual funds in several diverse categories. While it may be best known for actively managed funds, it offers some of the cheapest index funds available on the market. Therefore, it’s easy to see why it is one of the best no-load mutual fund companies in the investment universe today.

Below, we narrow down and present a list of the best funds that Fidelity offers.

Look For Retirement Funds With Low Fees

One thing that investors frequently overlook is the cost of holding a mutual fund, which is called an expense ratio. The company offering the fund imposes this fee on an annual basis as a percentage of your investment to help cover its operational expenses. The best retirement funds have lower expense ratios. They allow you to keep more of the returns on your investment, which results in a higher portfolio value at the time of retirement. In contrast, the higher fees of expensive funds can eat into your returns over time, resulting in a smaller nest egg.

For example, lets say that youre considering investing $100,000 in a mutual fund that has an expense ratio of 1% a year versus one that only charges 0.50% per year. The second fund saves you $500 a year in feesmoney that can continue to grow in your retirement portfolio. The longer your time horizon until retirement, the more that extra $500 a year adds up.

A 2018 fee study by Morningstar put the average expense ratio for mutual funds and exchange-traded funds at 0.48%, but ratios can vary depending on the level of management required for the fund. Actively-managed funds had an average expense ratio of 0.67%, while passively managed funds that track major indexes cost only 0.15% per year.

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Fidelity 500 Index Fund

The Fidelity 500 Index Fund is not only one of the largest mutual funds to track the Standard & Poor’s 500 Index with $366 billion AUM as of Q2 2022, it is also one of the cheapest. With a net expense ratio of just 0.015%, this fund ranks as one of the lowest-cost investments in the entire mutual fund universe. This expense ratio means that for every $1,000 invested in the fund, Fidelity charges just 15 cents per year in fees. This no-load fund earns five out of five stars from Morningstar.

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Are Target Date Retirement Funds Diversified

Diversification is important to any investor. Investing in a single mutual fund seems counter to that idea, but not in the case of target date retirement funds. Target date retirement funds provide ready-made diversified portfolios that hold thousands of domestic and international stocks and tens of thousands of bonds of various credit qualities. So yes, these funds are well diversified.

Schwab S& p 500 Index Fund

Best Performing Retirement Income Mutual Funds October 2012

If you want to invest in an official S& P 500 index fund, then the Schwab S& P 500 Index Fund is about the cheapest you’ll find. Its expense ratio is 0.02%, meaning you’d annually pay just $0.20 for every $1,000 you invest. Because this investment fee is so low, your returns are virtually identical to the performance of the S& P 500.

In 2021, the fund’s year-to-date total returns of 31.43% were almost identical to the S& P 500’s. By May 2022, both the fund and the S& P 500 were down about 16% for the year to date. There’s no minimum investment amount, so you can start investing with as little as $1.

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Vanguard Target Retirement 2040 Fund

The Vanguard Target Retirement 2040 Fund is best suited for investors planning to retire between 2038 and 2042, and its minimum initial investment is $1,000.

The fund was issued on June 7, 2006, and has generated an average annual return of 8.32% since its inception. According to Vanguard, the fund also has an annual expense ratio of just 0.14%. The fund has $33.1 billion in net assets, of which about 80% are held in stocks and 20% are held in bonds.

The Vanguard Target Retirement 2040 Fund is also considered a moderate-to-aggressive fund. However, as with the 2030 fund, the Vanguard Target Retirement 2040 Fund will become more conservative over time as the allocation of assets in the fund change. Similarly, this fund is also best for people who want to invest for 10 years or more.

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What Are The Benefits Of Investing In Retirement Funds In India

Planning for your retirement is essential due to various reasons like inflation and the rising cost of medical bills. Below are certain benefits that are common in most of the bestmutual funds for retirement:

  • Flexibility- Unlike other retirement policies such as the NPS, retirement mutual funds provide flexibility to investors as they do not need to purchase any annuity. Investors can opt for lump sum or monthly SIPs based on their economic status and plans.
  • Inflation Protection- Many retirement mutual funds that are performing well currently, provide inflation benefits to the investors.
  • Help in realising Long-Term Goals- People primarily invest in mutual funds for retirement because they want to achieve a long-term goal: preparing wealth for their future. The main objective is to help investors accrue a considerable corpus with nominal risks. Hence, they are pretty safe options for long-term investments.
  • Provides Life Insurance: Many retirement plans also provide life cover. If the fund-holder dies before his/her retirement, the funds provide financial support to the family. Moreover, some retirement plans allow investors to withdraw a lump-sum amount in case of some medical emergency.

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How To Invest In Mutual Funds For Dividends

Top 5 Performing Fidelity Index Funds in 2021

IBD: Many people think dividend mutual funds are a good way to generate income. When considering how to make money investing in mutual funds, is it better to take the dividend payouts to use as income or reinvest the dividends and sell fund shares as income is needed?

Hevert: It goes back to investor’s objective. If the goal is to generate current income, you take the dividends and interest and put then into a cash account.

If the goal is to grow the investments and take withdrawals from time to time, then reinvesting the dividends would support that strategy.

IBD: The issue with bond funds is that while the underlying bonds held in the portfolio have maturities, they often are not held to maturity, potentially putting the return of principal at risk. What’s your take on that?

Hevert: One of the great things about using a professionally managed mutual fund vs. building a portfolio by yourself, is the risk you pointed out. When you have bonds that can be called, you may have a large amount of return of principle. Then the question is, how do I maintain the fixed-income portfolio with a return of principle. What is the best way to reinvest that? That is the challenge that individuals face. With a professional fund manager if a bond is called, there is a plan for how that principal will be reinvested.

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Best Mutual Funds For Retirement: Loomis Sayles Bond Retail

Expenses: 0.91%Minimum Initial Investment: $2,500

A smart way to compliment, a core holding on the fixed-income side of the portfolio is with a multi-sector bond fund like Loomis Sayles Bond .

But LSBRX is not just any multi-sector bond fund it has the advantage of lead portfolio manager, Dan Fuss, who has been managing fixed income assets for five decades.

The portfolio nicely compliments a U.S. bond core holding by adding foreign bonds and high yield bonds to the mix. The result is a much more robust yield than VBMFX, at 3.2%. However, investors should keep in mind that, along with above-average yield and long-term returns, the high yield and international exposure adds greater market risk.

PS Decades of documentation shows that a small group of Fidelity funds when combined properly drastically reduce investor risk while outperforming the average Fidelity investor by a whopping 201%.

However, Fidelity wont give you the names of these powerful funds or tell you how to combine them properly. Fidelity is not going to tell you what funds to buy and sell. Investment expert Jim Lowell will.

Learn how Fidelitys most powerful funds can massively accelerate your retirement schedule right here.

Fidelity Funds Are Renowned For Their Managers’ Stock

Fidelity celebrates good stock picking. The firm holds a contest every year for its portfolio managers: They get 60 seconds to pitch one idea, and the best pitch wins a dinner for four. The best performer after 12 months also wins dinner.

Maybe that’s why many of the best Fidelity funds stand up so well in our annual review of the most widely held 401 funds.

Here, we zero in on Fidelity products that rank among the 100 most popular funds held in 401 plans, and rate the actively managed funds Buy, Hold or Sell. A total of 22 Fidelity funds made the list, but seven are index funds, which we don’t examine closely because the decision to buy shares in one generally hinges on whether you seek exposure to a certain part of the market.

Actively managed funds are different, however. That’s why we look at the seven actively managed Fidelity funds in the top-100 401 list. We also review seven Fidelity Freedom target-date funds as a group as they all rank among the most popular 401 funds. And we took a look at Fidelity Freedom Index 2030 it has landed on the top-100 roster for the first time, and while it’s index-based, active decisions are made on asset allocation.

Let’s look at some of the best Fidelity funds for your 401 plan. We’ll determine which ones stand up to scrutiny, and which ones, if any, you should avoid.

  • Rank among the top 401 funds: #59
  • Best for: Investors who want an all-in-one, stock-and-bond portfolio

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Learn More: Mutual Funds Vs Etfs

Exchange-traded funds and mutual funds are related but different. The mutual fund industry experienced its first major competition when ETFs launched in Canada. Vanguard, one of the most in-demand and lowest-cost ETF companies, entered the Canadian market in 2011, and since then sales of ETFs have outpaced those of mutual funds.

Traditional ETFs are passively managed and dont seek to beat the market. Instead, they hold the same basket of securities as the index theyre following and use that index as a benchmark to measure their performance. Matching the benchmark performance is the goal. Most traditional ETFs charge between 0.06% to 0.25% two percentage points lower than most mutual funds.

And theres not much difference among funds. In fact, many of the most popular equity, dividend, and balanced mutual funds in Canada have identical top 10 holdings.

Despite the lower fees and variety, ETFs have far fewer assets under management than mutual funds. Canadas ETF industry had about $352.2 billion AUM in 2022 compared to the $2 trillion stashed in mutual funds. One reason is because mutual funds have been around for so much longer.

Article Contents5 min read

Best Target Date Retirement Fund : Vanguard Target Retirement 2045 Fund Investor Shares

Best Fidelity Bond Funds For Retirees

If 2045 is your target then you sit somewhere midway in your career. At this point, investors look to hold a bit more bonds than those with more years to go. The Vanguard 2045 fund comes out as the top pick due to the lower fees and consistent historical performance. The mix of equities varies from the 2050 fund by only a few percentage points across categories.

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Purchase Your Index Fund

After youve decided which fund fits in your portfolio, its time for the easy part actually buying the fund. You can either buy directly from the mutual fund company or through a broker. But its usually easier to buy a mutual fund through a broker. And if youre buying an ETF, youll need to go through your broker.

Here Are The Nine Best Index Funds To Add To Your Portfolio For Steady Low

The best index funds can help you build wealth by diversifying your portfolio while minimizing your fees. Investing in an index fund is less risky than investing in individual stocks or bonds because index funds often hold hundreds of securities. Index funds spread your investment risk across the stocks or bonds of many different individual companies.

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Vanguard Target Date Funds

Choosing the best target date fund depends on the number of years to retirement but you will want to choose funds with lower costs.

Vanguard, for example, offers all-in-one funds called Vanguard Target Retirement Funds and average 0.12% as an expense ratio .

The industry average expense ratio for comparable target-date funds runs 0.60% per their research.

Vanguard offers a number of target date index funds, but the ones of most interest to this sites readers are likely the Vanguard Target Retirement 2050, 2055, and 2060 Funds .

These funds all offer 0.15% expense ratios when this was written.

Vanguard keeps its expense ratios low by having passive index ETFs make up the assets held in the target date funds.

The active component only comes when making the transition from stocks to fixed-income ETF holdings.

Otherwise, the ETFs held in the funds track various broader market indices.

Best Fidelity Funds For Retirees: Fidelity 500 Index Fund


52-Week Range: $127.73- $166.37

Expense Ratio: 0.015%

The third fund on our list is another mutual fund, the Fidelity 500 Index Fund which tracks the returns of the S& P 500. The fund started trading in 2011, and net assets are at $374 billion.

With regards to industry exposure, we see IT , healthcare and financials at the top. Over a quarter of the portfolio is in the leading 10 names. Among them are Apple Microsoft, Amazon and Alphabet .

FXAIX is down around 12% this year. This low-cost fund could find a place in most long-term portfolios.

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Fidelity Select Health Care Portfolio

52-Week Range: $23.14 $35.73

Expense Ratio: 0.68%

Recent metrics suggests the U.S. healthcare spending comprises around a fifth of the gross domestic product, or GDP. The Fidelity Select Health Care Portfolio invests in some of the leading healthcare names. It was first launched July 1981.

FSPHX, which tracks the MSCI U.S. IMI Health Care 25-50 Index, currently has 122 holdings. With regards to sub-sector weightings, we see managed healthcare with 19.79%, biotechnology with 18.26%, life sciences tools & services with 18.24%, pharmaceuticals with 15.54% and healthcare equipment with 15.01%.

The top 10 stocks in the portfolio account for almost half of of $7.9 billion in net assets. UnitedHealth, Eli Lilly , Danaher , Boston Scientific and Humana are among the most prominent holdings on the roster.

PSPHX has lost over 12% since January. The recent decline makes PSPHX attractive for long-term investors wishing to have exposure to healthcare stocks.

Best Fidelity Funds For Retirees: Fidelity Value Fund

52-Week Range: $12.30-$16.29

Expense Ratio: 0.79%

The final fund is the Fidelity Value Fund. It invests in securities that fund managers believe are undervalued. The fund started trading in December 1978.

FDVLX tracks the Russell Midcap Value Index and has 243 holdings. In terms of sectoral distribution, we see industrials with 19.61%, consumer discretionary with 13.69%, and financials with 12.76%.

The top 10 stocks in the portfolio represent about 10% of the $8.3 billion total net assets. Antero Resources , Edison and CubeSmart are among the largest positions in the fund.

The fund is down around 7% YTD. This Fidelity mutual fund deserves further research.

On the date of publication, Tezcan Gecgil, Ph.D., is both long and short AMZN and META. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.

Article printed from InvestorPlace Media,

©2022 InvestorPlace Media, LLC

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