Financial experts always emphasize the importance of retirement planning. While there are many investment avenues for those preparing for retirement, mutual funds are among the most popular. But individuals cannot just park their money in any mutual fund. Thorough research is important to lower the risk and get a good return. Fidelity is an actively managed mutual fund company with seasoned and large investment research teams, which makes them sought-after among those planning their retirement.
Best Fidelity funds for retirees
While Fidelity has many mutual funds one can consider, a few are highly rated for retirees:
Fidelity Multi-Asset Index Fund or FFNOX
Whenever someone talks about the best Fidelity funds for retirees, FFNOX has to be one of them. Earlier known as the Fidelity Four-in-One Index Fund, the FFNOX puts one’s money in seven bond index funds and Fidelity stocks. That means investors achieve broad diversification. FFNOX’s expense ratio is 0.13%, with average annual returns of 5.03% in three years, 8.46% in one year, and 12.72% year to date (YTD).
Fidelity Growth Discovery Fund or FDSVX
These funds are expected to fetch yields at an above-average rate, so investors are willing to pay a premium for them. The last decade, which primarily comprised a relatively stable domestic economy and ultra-low interest rates, was notably well for growth stocks. FDSVX’s expense ratio is 0.67%. It provides an average annual return of 7.60% in three years, 15.61% in one year, and a ten-year annualized return of 15.2%.
Fidelity Nasdaq Composite Index Fund or FNCMX
This fund closely monitors the price and yield of the Nasdaq Composite Index. Fidelity usually invests about 80% of its assets in common stocks covered by the Nasdaq. This mutual fund’s expense ratio is 0.37%. It provides average annual returns of 6.61% in three years, 18.37% in one year, and 37.58% YTD.
Fidelity Large Cap Growth Index Fund or FSPGX
Such funds invest about 80% of their assets into securities listed in the Russell 1000 Growth Index, focusing on large-cap growth stocks. After investing in this Fidelity fund, retirees can expect an expense ratio as low as 0.035%. The average annual returns are 18.53% in three years, -10.91% in one year, and 13.64% YTD.
Fidelity Total Market Index Fund or FSKAX
FSKAX fund managers track the total yield of a wide range of domestic equities. They allocate 80% of the fund’s assets to securities under the Dow Jones U.S. Total Stock Market Index. Investors of the FSKAX mutual fund can expect an expense ratio of 0.015% and average annual returns of 9.07% in three years, 8.42% in one year, and 19.08% YTD.
Fidelity US Sustainability Index Fund or FITLX
These types of Fidelity funds track the MSCI USA ESG Index. FITLX targets large and mid-cap companies with positive social, governance, and environmental performance, provided they share common return and risk attributes. FITLX’s expense ratio is 0.11%, while its average annual returns are 10.627% in three years, 12.47% in one year, and 22.99% YTD.
Fidelity 500 Index Fund or FXAIX
This fund seeks results that align with the total return of common stocks. About 80% of all assets are put in the stocks covered in the S&P 500 Index. Its expense ratio of FXAIX is 0.015%, and its average annual returns are 10.35% in three years, 10.14% in one year, and 20.28% YTD.
Types of Fidelity funds
Fidelity funds can be categorized into different types based on which stocks or assets they focus on:
Domestic equity funds
These are US stock funds that offer exposure to profitable and innovative companies. Some popular Fidelity funds for 2024 under this category are the Fidelity Value Discovery Fund, Fidelity Stock Selector Large-Cap Value Fund, and Fidelity Blue Chip Value Fund.
International equity funds
Under this fund, one invests in stocks of companies outside the country for more diversification. Two suitable international Fidelity funds for retirees are the Fidelity US Low Volatility Equity Fund and the Fidelity Sustainable US Equity Fund.
Sectors funds
Such funds focus on a specific industry sector, enabling investors to target a specific market. Energy, healthcare, and technology are some common sectors on which Fidelity funds focus. Retirees looking for sector funds can invest in the Fidelity Large-Cap Stock Fund and Fidelity Disciplined Equity Fund.
Income funds
Income funds invest in fixed-income securities and bonds, offering stability and income. The Fidelity Growth & Income Portfolio Fund and Fidelity Equity Dividend Income Fund are some of the best Fidelity income funds.
Asset allocation funds
These combine asset classes like cash, bonds, and socks to achieve a specific risk-return portfolio. Some examples include Fidelity Contrafund and Fidelity Capital Appreciation Fund.
Index funds
These include passive index funds that track specific market indices. The objective is to mimic the performance of the index they follow. Examples include the Fidelity 500 Index Fund and the Fidelity Large Cap Growth Index Fund.
