7 Best Fidelity Mutual Funds Of 2023 (2023)

Fidelity 500 Index Fund could be the keystone to a diversified investment portfolio. It gives you exposure to the S&P 500, the benchmark index that commonly serves as a stand-in for the entire U.S. stock market. The index tracks 500 of the most important U.S. public companies.

FXAIX is a tech-heavy fund, with about 26% of its money at work in information technology stocks, including many of the best-known names in the industry. Yet this passively managed fund still charges a very low annual fee.

The bulk of FXAIX’s roughly 500 holdings are growth firms. Many professional managers generally consider most of its holdings high quality–stocks with above average growth, with strong prospects to keep delivering that.

FXAIX is more diversified than most of its peers. Its top-10 holdings represent less than roughly 30% of the fund. It has outperformed its Morningstar large-cap blend peer group over various multi-year time periods.

Investors who strive to own companies that meet environmental, societal and governance metrics will appreciate the low annual fee and decent dividend yield offered by the Fidelity U.S. Sustainability Index Fund. Due to demands of the fund’s ESG benchmark index, prominent companies including Apple (AAPL), Amazon.com (AMZN) and Berkshire Hathaway (BRK.B) are not in this fund’s portfolio.

FITLX’s top 10 holdings make up roughly one third of the total portfolio. This boosts the fund’s dependence on the performance of these names. Still, it’s otherwise diversified, with about 270 total holdings. It tilts toward large-cap stocks, while mid-cap stocks are a second favorite. Growth stocks are a clear preference.

The fund’s favorite sector currently is tech with roughly a quarter of its money at work there. Healthcare stocks, financial services and consumer discretionary are its next three favorite sectors. Shareholders looking for a fund that lets them invest in accord with their values, while receiving competitive returns and dividend yield while paying a relatively low annual fee, might consider FITLX.

The Fidelity Mid Cap Index Fund has a gold-star rating from Morningstar, the research firm’s highest rating. It indicates the firm’s faith in FSMDX’s ability to outperform its peers over a typical market cycle.

FSMDX owns a mix of growth, value and core stocks, mainly in the mid-cap size range. Mid-cap stocks have a proven track record of outperformance. That comes from being smaller and more nimble than larger rivals.

The fund avoids the largest 200 U.S. stocks. With a portfolio of about 800 stocks, FSMDX is well diversified. Its top-10 stocks make up only about 5% of the fund. Morningstar projects that FSMDX’s earnings growth rate over the next five years will top its Morningstar category’s and its index’s. Technology and industrials are the fund’s largest sectors. Financial services, consumer cyclicals and healthcare are FSMDX’s next biggest.

Fidelity Nasdaq Composite Index Fund gives you access to well over 3,000 of the faster growing listings on the technology-heavy Nasdaq Compositeindex. In fact, roughly 45% of the fund is at work in information technology stocks. Marquee tech names Apple (AAPL), Amazon.com (AMZN), Microsoft (MSFT), Alphabet (GOOG), Tesla (TSLA) and Meta (META) are among its top 10 holdings.

FNCMX’s 10-year average annual return is among the best of our Fidelity fund selections, but its heavy tech weighting makes it volatile. The bulk of the fund’s holdings are large-cap stocks. Growth stocks predominate. Clinging to its index keeps the fund’s annual turnover rate low and its annual fee reasonable. It has outperformed its Morningstar category over the past 10 years.

If you can handle the extra volatility, this fund is worth a look if you also crave a growth-stock strategy.

The Fidelity Small Cap Value Fund could be a timely strategic way to play the market. How so? Small-cap stocks have outperformed large caps since 1926 in terms of average annual return. In addition, value stocks tend to outperform during bear markets and economic recessions. As a result, investors who think both the markets and the economy will be challenged this year might want a fund like FCPVX.

And no matter how the markets and economy behave this year, if you’re an investor who wants exposure to all corners of the market, FCPVX can be a good way to play small-cap valuefor the long run. The fund picks small-cap stocks that its managers believe are undervalued in terms of factors such as assets, sales, earnings, growth potential or cash flow.

FCPVX has outperformed the Russell 2000 Value Index and its Morningstar peer group over several recent long time periods. Note that the last time the fund paid a dividend was in December 2021, so investors seeking cash flow should look elsewhere. Still, this is a solid option for those who desire an actively managed small-cap value fund from a well-regarded fund family.

The Fidelity Corporate Bond Fund can fill a key niche in your portfolio. It offers diversification, counterbalancing the stock funds in your portfolio. It can also provide cash flow.

Bond funds have their own risks. A key one is that as interest rates rise, bond values decline. Still, after raising its interest rate to its highest point in 16 years, the Federal Reserve has signaled that it may pause hikes. Over the next few years, interest rates should fall, and that will provide patient investors with capital growth as the fund price increases.

FCBFX offers fixed income investorsbroad diversification. Roughly 70% of the fund’s more than 600 holdings are from U.S. issuers, the remainder from international issuers. More than 90% of the fund’s holdings are investment grade, and more than 80% of holdings are rated A or BBB. Corporate bonds make up roughly 90% of the portfolio.

Interest rates have soared. Currently, the fed funds rate is 5% to 5.25%, after ten consecutive Federal Reserve interest rate increases since March 2022. Rising rates have enabled money market mutual funds like the Fidelity Government Cash Reserves to reward investors with better and better yields.

What about the risk of the U.S. Treasury defaulting on its securities if Congress does not lift or suspend the federal debt ceiling? How exposed to Treasury debt is FDRXX?

Fortunately, FDRXX is fairly insulated from the potential risk of a default. Less than 2% of its portfolio consisted of Treasury bills, coupons and strips as of April 30. Instead, roughly 90% consisted of repurchase agreements and government agency floating-rate securities. Repurchase agreements, or “repos,” are essentially loans for one or two days to the Federal Reserve, backed by collateral and the Fed’s creditworthiness. The Fed has its own money and is not bound by the Treasury’s statutory debt limit.

FDRXX is fractionally more conservative and stable than money market mutual funds that focus on short-term commercial debt. Amid uncertainty and volatility in the stock market, FDRXX can provide your portfolio with ballast.