As someone who has spent years analyzing investment vehicles, I can confidently say Fidelity offers some of the best mutual funds for U.S. investors. Whether you’re building retirement savings or seeking aggressive growth, selecting the right fund requires balancing cost, performance, and risk. Below, I break down the 10 best Fidelity mutual funds based on data-driven metrics.
Table of Contents
How I Evaluated These Funds
I prioritized:
- Expense Ratios: Lower fees compound over time.
- Historical Risk-Adjusted Returns: Sharpe ratio, Sortino ratio.
- Portfolio Diversification: Exposure to sectors/market caps.
- Minimum Investment: Accessibility for new investors.
Let’s dive in.
1. Fidelity 500 Index Fund (FXAIX)
Category: Large-Cap Blend
Expense Ratio: 0.015%
Minimum Investment: $0
FXAIX tracks the S&P 500 and is my top pick for passive investors. With near-zero fees and a 10-year annualized return of 12.3% (as of 2023), it’s a cornerstone for long-term wealth.
Why It Wins
- Cost Efficiency: 99% cheaper than the average mutual fund.
- Tax Efficiency: Low turnover reduces capital gains distributions.
Compounding Example
A $10,000 investment at a 10% annual return grows to:
FV = 10,000 \times (1 + 0.10)^{20} = \$67,2752. Fidelity Total Market Index Fund (FSKAX)
Category: Total U.S. Stock Market
Expense Ratio: 0.015%
FSKAX extends FXAIX’s coverage to small- and mid-caps, offering true market representation. Over the past decade, it has slightly outperformed FXAIX due to higher small-cap exposure.
Key Stat
- 3,000+ holdings vs. FXAIX’s 500.
- Same 0.015% fee—unmatched diversification at no extra cost.
3. Fidelity Contrafund (FCNTX)
Category: Large-Cap Growth
Expense Ratio: 0.86%
FCNTX is Fidelity’s flagship active fund. Manager Will Danoff’s stock-picking prowess has delivered 13.2% annual returns since 1990, beating the S&P 500 by 1.5% annually.
Active vs. Index Performance (2013–2023)
| Fund | Avg. Return | Volatility |
|---|---|---|
| FCNTX | 13.2% | 14.1% |
| FXAIX | 12.3% | 13.9% |
While FCNTX’s higher fee is justified for some, index investors may prefer FXAIX’s simplicity.
4. Fidelity Blue Chip Growth Fund (FBGRX)
Category: Large-Cap Growth
Expense Ratio: 0.79%
FBGRX targets innovators like NVIDIA and Tesla. Its 15-year annualized return of 14.7% makes it ideal for growth seekers, but expect higher volatility.
Risk Note
- Standard deviation: 18.3% (vs. 13.9% for FXAIX).
- Best for: Investors with a 10+ year horizon.
5. Fidelity Dividend Growth Fund (FDGFX)
Category: Large-Cap Value
Expense Ratio: 0.53%
FDGFX focuses on dividend growth (not high yield), with holdings like Microsoft and UnitedHealth. Its 10-year return of 11.4% with lower volatility suits conservative investors.
Dividend Growth vs. High Yield
- FDGFX’s yield: 1.5% (but dividends grow 8% annually).
- High-yield funds: Often sacrifice growth for income.
6. Fidelity International Index Fund (FSPSX)
Category: Foreign Large-Cap
Expense Ratio: 0.035%
FSPSX covers developed markets (Europe, Japan). While international stocks have lagged U.S. equities, they provide essential diversification.
Currency Risk Consideration
R_{USD} = R_{local} + \frac{\Delta USD}{EUR}
A weakening dollar boosts returns for U.S. investors.
7. Fidelity Small Cap Index Fund (FSSNX)
Category: Small-Cap Blend
Expense Ratio: 0.025%
Small-caps historically outperform long-term. FSSNX’s 0.025% fee makes it the cheapest way to tap into this premium.
Size Factor Evidence
- 1926–2023: Small-caps returned 12.1% vs. 10.2% for large-caps.
8. Fidelity Real Estate Index Fund (FSRNX)
Category: Real Estate
Expense Ratio: 0.07%
FSRNX tracks REITs, offering inflation-resistant income. Its 8.5% average return since 2005 beats bonds for yield-focused portfolios.
REITs in a Portfolio
Adding 10% REITs to a 60/40 portfolio increased returns by 0.7% annually (1972–2023).
9. Fidelity Health Care Fund (FSPHX)
Category: Sector-Specific
Expense Ratio: 0.70%
Healthcare’s demographic tailwinds make FSPHX a defensive growth play. Its 15-year return of 14.1% crushes the S&P 500.
Top Holdings
- Eli Lilly (weight: 12.3%)
- UnitedHealth (weight: 9.8%)
10. Fidelity Balanced Fund (FBALX)
Category: Allocation—70% Equity/30% Bond
Expense Ratio: 0.53%
For hands-off investors, FBALX provides a diversified mix. Its 8.2% annual return since 1986 proves the power of automatic rebalancing.
Glide Path Example
FBALX’s equity allocation adjusts with market conditions, reducing downside risk.
Final Thoughts
These 10 Fidelity funds cover every strategy:
- Passive investors: FXAIX, FSKAX
- Active growth: FCNTX, FBGRX
- Income/Dividends: FDGFX
- Diversification: FSPSX, FSSNX
I recommend pairing 2–3 funds (e.g., FXAIX + FSPSX + FDGFX) to balance growth and stability. Always align choices with your risk tolerance and time horizon.
