Invest in these funds for the long haul.
While it’s tempting to watch the day-to-day gyrations on Wall Street, most investors should take a much longer view of their portfolio. After all, even if you’re at or near retirement, you have to keep your nest egg growing or producing income so you don’t run out of cash in the middle of your golden years. Such a long-term mindset allows investors to look beyond risky strategies chasing the latest headlines, and instead focus on simple, cost-effective strategies that can really pay off if you’re patient. The following seven Fidelity mutual funds are great for buy-and-hold investors.
Fidelity Contrafund Fund (ticker: FCNTX)
One of the most-respected mutual funds on the planet, Contrafund kicked off in 1967 and has been run by the same manager since 1990. Though it uses an active management style that has fallen out of favor amid the rise of index funds over the last few decades, Contrafund currently commands some $130 billion in assets to show it’s still quite popular. The fund focuses on large U.S. stocks, including about 380 stocks with big weightings toward megacap names such as Amazon.com Inc. (AMZN) and Microsoft Corp. (MSFT).
Expense ratio: 0.86%
Fidelity 500 Index Fund (FXAIX)
The flip side of Contrafund is this plain vanilla index fund that is benchmarked to the S&P 500 of the top 500 U.S. corporations. Just be aware that the S&P is an index weighted by size, so the top stocks such as Microsoft Corp. and Apple Inc. (AAPL) carry more weight since they are larger. When you add up the top 10 positions alone, you get 28% or so of the fund’s total assets. Be aware of this as you buy in, because even though you have the low cost and diversification of an index fund, you’re still pretty reliant on a short list of stocks.
Expense ratio: 0.015%
Fidelity Blue Chip Growth Fund (FBGRX)
FBGRX offers another way to get strategic about your exposure to large U.S. stocks. This Fidelity fund owns about 530 or so stocks, with very different weightings than you’ll find from the typical large-cap stock fund. That’s because it prioritizes large but still growth-oriented companies — putting ride-hailing platform Lyft Inc. (LYFT) among its top positions even though it is $19 billion in size. This makes Blue Chip Growth a great option for investors who are content to overlook some of the legacy leaders on Wall Street in pursuit of companies that could become the next favorites.
Expense ratio: 0.79%
Fidelity Value Fund (FDVLX)
The opposite of a growth-oriented strategy is to focus instead on value investments that have tangible profits and hard assets even if they may not have the sexy growth narrative of the latest tech startup. FDVLX offers a way to tap into this approach, with information technology making up just less than 7% of the entire fund — far below the 20% to 30% rating that is typical of most large U.S. stock funds. Instead, FDVLX relies on stock categories such as banks, consumer products companies and even some industrial manufacturers.
Expense ratio: 0.57%
Fidelity Total Market Index Fund (FSKAX)
Can’t decide on the kind of strategy you want? Then buy everything with this total market fund that has a whopping 3,700 holdings to cover every facet of the U.S. equity market. That includes large and stable stocks along with small but unprofitable upstarts. The portfolio isn’t fully diversified, with the top 10 holdings including stocks such as Apple Inc. and JPMorgan Chase & Co. (JPM) commanding about 23% of assets. Still, you get at least partial exposure to just about every company out there to theoretically provide more stability over the long term.
Expense ratio: 0.015%
Fidelity U.S. Bond Index Fund (FXNAX)
Looking beyond stocks, no investors looking at the future should overlook the power of fixed-income instruments in their portfolio. These assets retain value well over the long term without the risk of volatility, and even a modest 2% or so in dividends per year can add up significantly when you have enough time. FXNAX offers a diversified portfolio built on bonds from almost 600 different issuers across more than 8,000 positions. Adding to the stability is the fact that these loans are from the likes of the U.S. Treasury and well-capitalized stocks such as Bank of America Corp. (BAC). Though the current rate environment is low, giving this fund a yield of just 1.8%, that figure may rise to deliver increased steady income over the long term.
Expense ratio: 0.025%
Fidelity Strategic Income Fund (FADMX)
Of course, income investing involves a logical trade-off where lower risk means lower return. So how can you tap into higher yields without taking on too much risk? A mutual fund such as Fidelity Strategic Income Fund can do that for you through a portfolio that includes a few strategic investments in emerging market debt, select high-yield bonds and traditional bonds. This balancing act can really deliver with a much more stable performance over the long term than the more volatile stock market, but with a current yield of 3.4% to easily top the typical bond fund.
Expense ratio: 0.67%
Best Fidelity mutual funds to buy and hold:
— Fidelity Contrafund Fund (FCNTX)
— Fidelity 500 Index Fund (FXAIX)
— Fidelity Blue Chip Growth Fund (FBGRX)
— Fidelity Value Fund (FDVLX)
— Fidelity Total Market Index Fund (FSKAX)
— Fidelity U.S. Bond Index Fund (FXNAX)
— Fidelity Strategic Income Fund (FADMX)
