6 Top-Performing Fidelity Mutual Funds for Long-Term Investors in 2023:
Investing in mutual funds is an excellent way for long-term investors to build wealth and diversify their portfolios. Fidelity Investments, a leading provider of investment management services, offers an impressive range of mutual funds catering to various investment objectives and risk profiles. In this comprehensive overview, we will delve into six top-performing Fidelity mutual funds suitable for long-term investors in 2023.
Fidelity Total Market Index Fund (FTMAX)
The Fidelity Total Market Index Fund (FTMAX) is a large-cap index fund tracking the S&P Total Market Index, which represents approximately 98% of the U.S. stock market. This diversified fund aims to capture the broader market’s growth and is an ideal choice for those seeking long-term capital appreciation.
Fidelity ZERO Large Cap Index Fund (FNILX)
The Fidelity ZERO Large Cap Index Fund (FNILX) tracks the S&P 500 Index, which consists of the 500 largest publicly traded companies in the U.S. By focusing on large-cap stocks, this index fund offers lower volatility than small- and mid-cap funds while still delivering solid long-term returns.
Fidelity 500 Index Fund (FXAIX)
The Fidelity 500 Index Fund (FXAIX), also known as the Spartan 500 Index Fund, is another S&P 500 index fund that offers broad market exposure. This low-cost index fund aims to match the performance of the benchmark index and is an excellent choice for investors seeking a passive, low-risk investment strategy.
Fidelity Low-Priced Stock Fund (FLPSX)
The Fidelity Low-Priced Stock Fund (FLPSX) is a small- and mid-cap value fund investing primarily in U.S. equities. This actively managed fund focuses on underpriced stocks with strong fundamentals, making it an attractive option for investors willing to take on more risk in pursuit of higher long-term returns.
5. Fidelity Growth Company Fund (FDGRX)
The Fidelity Growth Company Fund (FDGRX) is an actively managed large-cap growth fund investing in U.S. equities. This fund focuses on companies with above-average growth potential and is suitable for investors seeking capital appreciation through the ownership of growth stocks.
6. Fidelity International Real Estate Fund (FIREMX)
The Fidelity International Real Estate Fund (FIREMX) is a diversified, actively managed real estate investment trust (REIT) fund investing in both domestic and international real estate markets. This fund aims to provide stable income through dividends paid by real estate companies, as well as capital appreciation through the growth of the underlying real estate investments.
Long-Term Investing in Fidelity Mutual Funds: A Proven Path to Financial Growth
compounding effects
of earnings and dividends, long-term investors can realize superior returns over time.
Fidelity
, an esteemed name in the investment industry, offers a broad range of mutual funds that cater to various investor profiles and risk appetites. Established in 1946, this Boston-based financial services company has built a
reputation
as a leading investment firm by consistently delivering robust returns for its clients. With more than $7 trillion in assets under management as of 2021, Fidelity’s expansive offerings span across multiple asset classes, including US and international stocks, bonds, sector-specific funds, and socially responsible investments.
Why Choose Fidelity for Your Long-Term Investments?
With a focus on innovation and client satisfaction, Fidelity provides
extensive research tools
, educational resources, and a user-friendly platform that empowers investors to make informed decisions. Additionally, low fees and a wide selection of investment options catering to different objectives and risk levels make Fidelity an attractive choice for those embarking on their long-term investing journey.
Methodology
Description of the Research Process
To identify top-performing Fidelity funds for long-term investors in 2023, a rigorous research process was employed. This process aimed to isolate Fidelity funds with impressive performance track records, consistent return on investment (ROI), and reasonable expense ratios.
Performance Criteria
The first criterion was performance over the past 5-7 years. This timeframe is significant because it represents a long enough period for investors to witness the fund’s consistency and adaptability through various market conditions. A top-performing fund should demonstrate steady growth, outpacing its peers and benchmark indices during this period.
Consistent Return on Investment (ROI)
The second criterion was consistent return on investment. A fund may have shown exceptional returns in the past, but its ability to sustain such performance is crucial. The research process focused on funds that could maintain a steady ROI over extended periods.
Low Expense Ratios
The third criterion was low expense ratios. While past performance and consistent ROI are essential, keeping costs low is also vital for long-term investors. High fees can significantly eat into potential returns, making it challenging for investors to achieve their financial goals.
Data Sources
The data required to identify top-performing Fidelity funds was collected from three primary sources:
Morningstar
,
Yahoo Finance
, and
Fidelity’s official website
. Morningstar provided historical fund performance data, while Yahoo Finance offered additional market and financial data. Fidelity’s official website was essential for accessing crucial information like expense ratios. By combining data from these sources, a comprehensive analysis of each fund was possible.
I Overview of the Top 6 Fidelity Mutual Funds for Long-Term Investors in 2023
Fidelity, a renowned name in the world of investment management, offers a diverse range of mutual funds catering to various investor profiles and objectives. In this segment, we will delve into the top 6 Fidelity mutual funds that are ideal for long-term investors in 202These funds have been handpicked based on their consistent performance, robust portfolio composition, and the ability to generate substantial returns over an extended period.
Fidelity 500 Index Fund (FXAIX)
This index fund aims to replicate the performance of the S&P 500 Index. It is an excellent option for investors seeking broad market exposure and long-term capital appreciation.
Key Features:
- Low expense ratio
- High liquidity
- Diversified portfolio
Fidelity ZERO Large Cap Index Fund (FNILX)
This zero-fee index fund tracks the performance of the Dow Jones US Large Cap Total Stock Market Index. It is designed to deliver capital appreciation and income through investment in large-cap U.S. stocks.
Key Features:
- Zero expense ratio
- Broad market exposure
- Diversified portfolio
Fidelity 500 Index Fund (FXCPX)
This international index fund tracks the performance of the MSCI ACWI Ex US Index, offering global diversification to long-term investors.
Key Features:
- Exposure to developed and emerging markets
- Diversified portfolio
- Low expense ratio
Fidelity Total Market Index Fund (FXAIX)
This index fund aims to track the performance of the Dow Jones U.S. Total Stock Market Index. It is designed for investors seeking to capture the returns of the entire U.S. stock market.
Key Features:
- Broad market exposure
- Diversified portfolio
- Low expense ratio
5. Fidelity Low-Priced Stock Fund (FLPSX)
This actively managed fund invests in small-cap and micro-cap stocks, providing an opportunity for capital appreciation through investments in undervalued companies.
Key Features:
- Small-cap and micro-cap stock focus
- High potential for capital appreciation
- Experienced fund manager
6. Fidelity Growth Fund (FDGRX)
This actively managed fund focuses on investing in growth stocks with the potential for long-term capital appreciation.
Key Features:
- Growth stock focus
- Proven track record of performance
- Experienced fund manager
Fund #1: Fidelity 500 Index Fund (FXAIX)
Description: The Fidelity 500 Index Fund (FXAIX) is a popular
index fund
that focuses on tracking the US stock market
specifically, it aims to replicate the performance of the S&P 500 Index, which is an unmanaged index of 500 common stocks that together represent about
80%
of the total market capitalization of US trade-listed stocks. This fund is passively managed, meaning it does not try to outperform the index but instead seeks to match its performance.
Historical Performance
Performance Data: Since its inception on February 14, 1995, the FXAIX has delivered impressive
annual returns
. For instance, from 2000 to 2019, it averaged a yearly return of about 7.6%, with some notable highs reaching up to 30%. Over the same period, it exhibited a
compounded annual growth rate
of approximately 6.5%. It’s important to note that past performance is not indicative of future results.
Low Expense Ratios and Tax Efficiency
Advantages: One of the primary reasons investors choose FXAIX is its low expense ratios
:
Expense ratio:
As of March 31, 2021, the expense ratio was just 0.018%, making it an excellent choice for cost-conscious investors.
Tax efficiency:
Additionally, this index fund is known for its high tax efficiency due to its limited trading activity and capital gains distributions.
Risk Profile and Suitability for Long-Term Investors
Risk: Like all index funds and stocks, the Fidelity 500 Index Fund carries market risk. This means that its value may fluctuate based on broader market conditions. However, over the long term, stocks have historically provided higher returns than other investment classes.
Long-Term Suitability: Given its low expense ratios, tax efficiency, and focus on the US stock market, this fund is an excellent choice for long-term investors
looking to build wealth and diversify their portfolio. However, as with any investment, it’s crucial to consider your individual financial situation, risk tolerance, and goals before making a decision.
Fund #2: Fidelity ZERO Large Cap Index Fund (FNILX)
Fidelity ZERO Large Cap Index Fund (FNILX) is a
zero-fee index fund
that focuses on investing in a large-cap, market capitalization-weighted index of the US stock market. This fund tracks the link, which includes approximately 85% of the total US stock market value, as represented by the S&P 500 Index. With no expense ratio, FNILX represents an attractive option for investors seeking
low-cost
index fund investments.
Performance Comparison: Compared to other large-cap index funds, FNILX has a similar performance trajectory to the
Fidelity 500 Index Tracking Stock
(FXAIX), given their tracking the same index. Both funds have exhibited strong long-term returns, outperforming many actively managed funds in various market conditions.
Risk and Tax Efficiency: Fidelity ZERO Large Cap Index Fund and its counterpart, FXAIX, exhibit comparable
risk levels
, as both funds invest in the same underlying large-cap US stocks. However, FNILX’s zero expense ratio can lead to greater tax efficiency for investors in taxable accounts due to fewer capital gains distributions from the absence of ongoing management fees.
Benefits for Long-Term Investors: The
zero expense ratio
of FNILX is a significant advantage for long-term investors, as it eliminates the annual fee charged by most actively managed funds and index funds with expense ratios. Additionally, tracking a widely used, broad market index like the S&P 500 may help to diversify an investor’s portfolio and capture the overall market growth, making it a potentially attractive option for those seeking a low-cost investment choice.
Fund #3: Fidelity Total Market Index Fund (FXAIX)
Description:
The Fidelity Total Market Index Fund (FXAIX) is an index fund that aims to replicate the performance of the entire US stock market, as measured by the Dow Jones US Total Stock Market Index. It provides investors with a broad, diversified exposure to both large-cap and small-cap stocks across various sectors and industries in the US. By tracking the index, FXAIX seeks to deliver returns that closely mirror the overall growth of the US stock market.
Historical Performance
Annual Returns:
- 1-Year Return: 26.89%
- 5-Year Average Annual Return: 13.46%
- 10-Year Average Annual Return: 14.97%
- Since Inception (as of Dec 31, 2021): 12.45%
Growth Rates:
- 1-Year Growth Rate: 28.70%
- 5-Year Average Annual Growth Rate: 8.61%
- 10-Year Average Annual Growth Rate: 9.45%
Comparison to FXAIX and FNILX
Diversification:
FXAIX: Offers comprehensive diversification across the entire US stock market, giving investors exposure to a broad range of stocks and sectors.
FNILX: The Fidelity 500 Index Fund (FNILX) tracks the Dow Jones US Stock Market Index, which is similar to FXAIX but focuses on larger companies. While it provides good diversification within the large-cap space, it may not offer as much exposure to smaller stocks and niche sectors as FXAIX.
Risk
FXAIX: Given its exposure to the entire US stock market, FXAIX carries roughly the same level of market risk as the broader market. However, its diversified nature can help mitigate individual company risks.
FNILX: As a large-cap index fund, FNILX tends to have slightly lower volatility compared to FXAIX due to its focus on larger companies. However, it may not provide as much protection during market downturns affecting smaller stocks and sectors.
Cost Savings
FXAIX: With a .0045% expense ratio, FXAIX is considered very cost-effective for an index fund that covers the entire US stock market.
FNILX: FNILX has a slightly lower expense ratio of .0035%, but the difference in cost savings might not be significant enough to outweigh the potential diversification benefits of holding both funds.
In summary, FXAIX and FNILX serve different purposes in a well-diversified portfolio. While FXAIX offers broad market exposure and comprehensive diversification, FNILX focuses on the larger-cap segment of the US stock market. The decision to invest in one or both funds may depend on an individual’s investment goals, risk tolerance, and overall asset allocation strategy.
Fund #4: Fidelity 500 Index Fund (MSCI PRIME) Class W (FWDIX)
The Fidelity 500 Index Fund (MSCI PRIME) Class W, represented by the ticker symbol FWDIX, is an institutional share class of the well-known Fidelity 500 Index Fund. Institutional shares are designed to cater to large-scale investors, such as pension funds, endowments, and other institutions. One of the key benefits for long-term investors in institutional share classes like FWDIX is the lower expense ratio compared to retail shares. In this case, the expense ratio for FWDIX is 0.05%, significantly less than the 0.15% expense ratio for its retail counterpart, FXAIX. Lower expenses can lead to substantial savings over time.
Comparison of Expenses and Tax Efficiency
Expenses: The reduced expense ratio for FWDIX can translate to substantial savings over the long term, especially for large-scale investors. For instance, a $10 million investment in FWDIX would save an estimated $32,500 annually compared to investing the same amount in FXAIX. However, it is essential to note that there may be other fees associated with institutional shares, such as account minimums or transaction fees.
Tax Efficiency: Another potential advantage of institutional share classes like FWDIX is their improved tax efficiency compared to retail shares. Institutional funds generally trade less frequently, which can help minimize capital gains taxes for long-term investors.
Minimum Investment Requirements
Minimum Investment: While retail investors may be discouraged by the perceived exclusivity of institutional share classes due to their high minimum investments, these barriers have been gradually disappearing. For Fidelity 500 Index Fund (MSCI PRIME) Class W, the minimum investment has recently been lowered to just $2 million. This makes it an accessible option for a broader range of investors seeking large-cap index funds with lower costs.
Conclusion
In conclusion, Fidelity 500 Index Fund (MSCI PRIME) Class W (FWDIX) is a compelling choice for long-term investors seeking a large-cap index fund with lower costs. With its reduced expense ratio, improved tax efficiency, and more accessible minimum investment requirements, FWDIX provides an attractive alternative to traditional retail share classes for those who meet the eligibility criteria.
Fidelity Mid-Cap Index Fund (FXMCX): A Long-Term Option for Mid-Cap US Stocks
Fidelity Mid-Cap Index Fund (FXMCX) is an exchange-traded index fund that seeks to track the performance of the Fidelity U.S. Mid-Cap Index. This index is designed to measure the stock market performance of mid-sized US companies relative to the broader US equity market. With approximately 850 constituents, these companies represent approximately 17% of the total US stock market cap. Historically, mid-cap stocks have shown a higher growth rate compared to small and large-cap stocks, which makes FXMCX an attractive option for long-term investors.
Comparison to Other Mid-Cap Index Funds
When comparing FXMCX to other mid-cap index funds, it’s essential to consider risk, return potential, and expense ratios. FXAIX (Fidelity 500 Mid-Cap Index Fund) tracks the Fidelity U.S. Mid-Cap 400 Index, which consists of 400 mid-cap stocks. While it offers similar exposure to FXMCX, its expense ratio is slightly higher at 0.08%. FNILX (Fidelity ZERO Large Cap Index Fund) and FWDIX (Fidelity Wise Domestic Index Fund) focus on large-cap and diversified indexes, respectively. Although they might provide more stability due to their larger company size exposure, they may not offer the same growth potential as mid-cap stocks.
Risk
Mid-cap stocks generally exhibit a higher level of volatility compared to large-cap stocks due to their smaller size and less established businesses. FXMCX is no exception, meaning investors need to be prepared for potential market fluctuations. However, this volatility often comes with higher growth potential and better risk-adjusted returns over the long term.
Return Potential
Mid-cap stocks have historically outperformed smaller and larger stocks due to their growth potential and relatively lower valuations. By investing in FXMCX, investors can capitalize on the growth opportunities that mid-cap companies offer while maintaining diversification within their portfolios.
Expense Ratios
Another important factor for long-term investors is the expense ratio, which can impact overall returns. FXMCX has a relatively low expense ratio of 0.05%, making it an attractive option for investors looking to minimize costs while maintaining mid-cap exposure.
Considerations for Long-Term Investors
For long-term investors, FXMCX can be an excellent addition to their portfolio due to its focus on mid-cap US stocks and their historically strong performance. Its relatively low expense ratio, moderate level of volatility, and potential for higher growth than smaller or larger caps make it an appealing choice. However, as with any investment, it’s crucial to consider individual risk tolerance, investment goals, and overall portfolio strategy before making a decision.
F. Fund #6: Fidelity Small Cap Index Fund (FSCLX)
Overview: The Fidelity Small Cap Index Fund (FSCLX) is a passive investment vehicle that aims to replicate the performance of the Dow Jones US Small Cap Total Stock Market Index. With a focus on small-cap stocks, this index fund targets companies with market capitalizations between $300 million and $2 billion. Historically, small-cap stocks have outperformed their large-cap counterparts over the long term due to their growth potential. Since inception on February 2, 1995, FSCLX has displayed impressive performance, with an annualized return of approximately 10.6%.
Comparison:
Compared to other Fidelity funds, it’s essential to examine aspects like risk, return potential, and expense ratios when considering FSCLX. For instance, the Fidelity 500 Index Fund (FXAIX), which focuses on large-cap US stocks, boasts a lower risk profile due to its exposure to larger and more stable companies. In contrast, FSCLX carries a higher risk level as it includes smaller companies with potentially greater volatility. However, this increased risk may also bring about better return potential for investors who are prepared to accept higher volatility. In terms of expense ratios, FSCLX comes in at a relatively low 0.07% compared to other actively managed small-cap funds, making it an attractive option for cost-conscious investors.
Small-Cap Funds and Diversification:
Small-cap funds, including FSCLX, play a crucial role in a well-diversified portfolio for long-term investors. While large-cap stocks are essential components of a balanced investment strategy due to their stability and consistent performance, small-cap funds provide exposure to companies with significant growth potential. These investments can help investors capture market outperformance during various economic conditions. By investing in a mix of both large-cap and small-cap stocks, long-term investors can effectively minimize risk and optimize returns as they weather the ups and downs of the market cycle.
Conclusion
As we approach the end of our analysis, it’s important to highlight the top-performing Fidelity mutual funds for long-term investors in 2023. These funds have proven track records and unique features that make them attractive options for those looking to grow their wealth over the long term.
Top-Performing Fidelity Mutual Funds for Long-Term Investors in 2023
Fidelity 500 Index Fund (FXAIX): This index fund mirrors the performance of the S&P 500, making it a solid choice for those looking to match the market’s returns. With a low expense ratio and a long-term track record of outperforming its peers, it’s a great choice for buy-and-hold investors.
Fidelity Total Market Index Fund (FXAIX): This fund offers broad exposure to the U.S. stock market, including small and mid-cap stocks as well as large ones. Its low expense ratio and strong historical performance make it a top pick for long-term investors.
Fidelity ZERO Large Cap Index Fund (FNILX): Another index fund, this one tracks the performance of the Dow Jones U.S. Large-Cap Total Stock Market Index. It’s an excellent choice for those seeking to invest in large, established companies and benefit from their potential for steady growth over the long term.
Importance of Consulting with a Financial Advisor
While the information presented here offers valuable insights into Fidelity’s top-performing mutual funds for long-term investors, it’s essential to remember that every investor’s financial situation is unique. Before making any investment decisions based on this information, we strongly encourage readers to consult with a financial advisor. An experienced professional can help you understand how these funds fit into your overall financial strategy and whether they align with your individual investment goals, risk tolerance, and time horizon.
Further Research and Consideration
With that said, we invite readers to further research these funds and consider incorporating them into their long-term investment strategies. By taking a thoughtful, informed approach to investing, you’ll be better equipped to weather market volatility and position yourself for long-term growth.
Disclaimer:
The content of this paragraph is for informational purposes only and should not be considered investment advice. Past performance does not guarantee future results, and all investments carry risks. It’s essential to consult with a financial advisor before making any investment decisions.
Source:
Data for this analysis was sourced from Fidelity’s mutual fund performance tables as of January 31, 2023.