As a finance expert, I often get asked which Fidelity mutual funds make the most sense for long-term investors. After years of analyzing performance, expense ratios, and portfolio composition, I’ve narrowed down the seven best Fidelity mutual funds that offer stability, growth, and low costs. These funds are ideal for buy-and-hold investors who want to build wealth over decades rather than chase short-term gains.
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Why Fidelity Mutual Funds?
Fidelity Investments is one of the largest asset managers in the world, with a reputation for low-cost index funds and actively managed strategies. Their funds consistently rank among the top performers, and their expense ratios are often lower than competitors like Vanguard or BlackRock. For long-term investors, minimizing costs is crucial because fees compound over time, eating into returns.
Consider this: a 1\% annual fee on a \$100,000 investment over 30 years could cost you over \$100,000 in lost returns, assuming a 7\% annual return. Fidelity’s low-cost structure helps mitigate this drag.
How I Selected These Funds
I evaluated funds based on:
- Historical performance (10+ years of data)
- Expense ratios (the lower, the better)
- Portfolio diversification (sector and geographic exposure)
- Manager tenure (stability in leadership)
- Risk-adjusted returns (Sharpe ratio, standard deviation)
Now, let’s dive into the seven best Fidelity mutual funds to buy and hold.
1. Fidelity 500 Index Fund (FXAIX)
Key Metrics
- Expense Ratio: 0.015\%
- 10-Year Annualized Return: 12.5\%
- Assets Under Management (AUM): \$400+ billion
FXAIX tracks the S&P 500, providing exposure to large-cap U.S. stocks like Apple, Microsoft, and Amazon. Its ultra-low expense ratio makes it one of the cheapest ways to invest in the U.S. market.
If you invest \$10,000 in FXAIX with an annual return of 10\%, after 20 years, your investment would grow to:
FV = 10,000 \times (1 + 0.10)^{20} = \$67,275The compounding effect is powerful, especially with minimal fees.
2. Fidelity Total Market Index Fund (FSKAX)
Key Metrics
- Expense Ratio: 0.015\%
- 10-Year Annualized Return: 11.8\%
- AUM: \$70+ billion
FSKAX provides exposure to the entire U.S. stock market, including small and mid-cap stocks. This diversification reduces concentration risk compared to FXAIX.
Comparison Table: FXAIX vs. FSKAX
| Fund | Expense Ratio | 10-Year Return | Top Holdings |
|---|---|---|---|
| FXAIX | 0.015\% | 12.5\% | Large-Cap Stocks |
| FSKAX | 0.015\% | 11.8\% | Full Market |
While FXAIX has slightly higher returns, FSKAX offers broader diversification.
3. Fidelity International Index Fund (FSPSX)
Key Metrics
- Expense Ratio: 0.035\%
- 10-Year Annualized Return: 4.9\%
- AUM: \$40+ billion
International diversification is crucial. FSPSX tracks the MSCI EAFE Index, covering developed markets outside the U.S. While its returns lag U.S. stocks, it provides a hedge against domestic market downturns.
4. Fidelity Real Estate Index Fund (FSRNX)
Key Metrics
- Expense Ratio: 0.07\%
- 10-Year Annualized Return: 8.2\%
- AUM: \$10+ billion
Real estate investment trusts (REITs) offer inflation protection and steady dividends. FSRNX tracks the MSCI USA IMI Real Estate Index, providing exposure to commercial and residential properties.
5. Fidelity Blue Chip Growth Fund (FBGRX)
Key Metrics
- Expense Ratio: 0.79\%
- 10-Year Annualized Return: 18.3\%
- AUM: \$50+ billion
This actively managed fund focuses on high-growth companies like NVIDIA and Tesla. While the expense ratio is higher, its long-term returns justify the cost for growth-oriented investors.
6. Fidelity Dividend Growth Fund (FDGFX)
Key Metrics
- Expense Ratio: 0.53\%
- 10-Year Annualized Return: 11.1\%
- AUM: \$30+ billion
Dividend growth stocks provide compounding through reinvestment. FDGFX invests in companies like Johnson & Johnson and Procter & Gamble, which consistently raise dividends.
7. Fidelity Balanced Fund (FBALX)
Key Metrics
- Expense Ratio: 0.53\%
- 10-Year Annualized Return: 9.2\%
- AUM: \$20+ billion
For conservative investors, FBALX offers a mix of stocks (70%) and bonds (30%), reducing volatility while maintaining growth potential.
Final Thoughts
These seven Fidelity mutual funds cover a spectrum of investment strategies—from low-cost indexing to active growth and dividend investing. By holding a mix of these funds, you can build a diversified, long-term portfolio that balances risk and reward.
