What are the best Fidelity index funds and ETFs for long-term investors? Fidelity accounts hold more money than Vanguard accounts. I’ll list my options. These are solely my personal opinions. I wasn’t forced to write any of anything by anyone.
All-In-One: Fidelity Freedom Index Funds
Fidelity Freedom Index Funds are all-in-one index funds that include other Fidelity index funds. Simply choose one based on your target year and risk appetite. They’re convenient, low-cost, widely diversified, and rebalanced automatically. These are excellent options unless you want to manage your own mix. There is no requirement for a minimum investment in any of them. You may actually start with $1 and have a low-cost, globally diversified portfolio within minutes.
Please note that these Fidelity Freedom Index Funds are not the same as the Fidelity Freedom Funds that do not include the word “Index” in their names. Fidelity Freedom Index Funds: Hidden Gems For Your IRA and 401k has additional information.
Mix Your Own Index Funds and/or ETFs
Fidelity has over 20 Fidelity-branded index funds to choose from. There is no requirement for a minimum investment in any of them. If you trade ETFs online with Fidelity, you will not be charged a commission. You can build a strong portfolio with solely Fidelity index funds, only ETFs, or a mix-and-match of Fidelity index funds and ETFs, whether you prefer mutual funds or ETFs.
US Broad Stock Market
Fidelity Total Market Index Product (FSKAX) is an index fund having an expense ratio of approximately 0.015 percent. A newer Fidelity ZERO Total Market Index Fund (FZROX) with a 0% cost ratio is also available.
An ETF is significantly more tax efficient outside of retirement funds. Vanguard Total Stock Market ETF (VTI, 0.03 percent cost ratio) and iShares Core S&P Total U.S. Stock Market ETF are two options (ITOT, expense ratio 0.03 percent ).
International Broad Stock Market
The Fidelity Total International Index Product (FTIHX, cost ratio 0.06 percent) is a well-rounded index fund from Fidelity. It covers developed and emerging markets, as well as international small-caps. Although it does not include international small-caps, Fidelity also provides a newer Fidelity ZERO International Index Fund (FZILX) with a 0% expense ratio.
Vanguard Total International Stock ETF (VXUS, 0.09 percent expense ratio) and iShares Core MSCI Total International Stock ETF (IXUS, 0.09 percent expense ratio) are two ETFs that cover the same wide international stock markets.
US Fixed Income
Fidelity’s Fidelity U.S. Bond Index Fund (FXNAX, 0.025 percent cost ratio) covers the overall U.S. bond market. You can buy Vanguard Total Bond Market ETF (BND, 0.035 percent expense ratio) or iShares Core U.S. Aggregate Bond ETF if you prefer an ETF (AGG, net expense ratio 0.05 percent ).
Fidelity provides the Fidelity Inflation-Protected Bond Index Fund (FIPDX) with a 0.05 percent cost ratio for inflation-protected bonds. If you prefer an ETF, the Schwab U.S. TIPS ETF (SCHP, 0.05 percent cost ratio) is a decent option.
Three-Fund Portfolio
The three major asset classes listed above will cover almost everything a person requires. You only have to make two choices:
Here’s an example of someone who answered 60 percent in stocks and 70% in international stocks:
US Small Cap Stocks
Fidelity Small Cap Index Fund is a fund that invests in small-cap equities in the United States (FSSNX, expense ratio 0.025 percent ). If you prefer an ETF, consider iShares Core S&P Small-Cap ETF (IJR, 0.07 percent fee ratio), Vanguard Small-Cap ETF (VB, 0.05 percent expense ratio), Schwab US Small-Cap ETF (SCHA, 0.04 percent expense ratio), or SPDR Portfolio Small Cap ETF (SPSM, expense ratio 0.05 percent ).
Fidelity Small Cap Value Index Fund is a fund that invests in small cap value companies in the United States (FISVX, expense ratio 0.05 percent ). You can buy Vanguard Small-Cap Value ETF (VBR, 0.07 percent expense ratio) or SPDR S&P 600 Small Cap Value ETF if you prefer an ETF (SLYV, expense ratio 0.15 percent ).
US REITs
Fidelity Real Estate Index Fund is a fund offered by Fidelity (FSRNX, expense ratio 0.07 percent ). Vanguard Real Estate ETF (VNQ, 0.12 percent fee ratio), Schwab U.S. REIT ETF (SCHH, 0.07 percent expense ratio), and iShares Core U.S. REIT ETF are all good options (USRT, expense ratio 0.08 percent ).
Emerging Markets
Fidelity Emerging Markets Index Fund (FPADX) has an expense ratio of 0.08 percent. You can buy Vanguard FTSE Emerging Markets ETF (VWO, 0.12 percent expense ratio), iShares Core MSCI Emerging Markets ETF (IEMG, 0.14 percent expense ratio), or SPDR Portfolio Emerging Markets ETF if you prefer an ETF (SPEM, expense ratio 0.11 percent ).
International Small Cap Stocks
Fidelity does not have a small-cap index fund for international companies. You can buy Vanguard FTSE All-World ex-US Small-Cap ETF if you like to overweight overseas small-cap companies (VSS, expense ratio 0.12 percent ).
One Fidelity Freedom Index Fund will provide broad diversity with the simplest management. Simply choose a year that is closest to your anticipated retirement age.
- For US stocks, Fidelity Total Market Index Fund (FSKAX), Fidelity ZERO Total Market Index Fund (FZROX), or Vanguard Total Stock Market ETF (VTI); for international stocks, Fidelity Total Market Index Fund (FSKAX), Fidelity ZERO Total Market Index Fund (FZROX), or Vanguard Total Stock Market ETF (VTI);
- For international stocks, Fidelity Total International Index Fund (FTIHX) or Vanguard Total International Stock ETF (VXUS) are good options.
- For US bonds, look into the Fidelity U.S. Bond Index Fund (FXNAX) or the Vanguard Total Bond Market ETF (BND). For inflation protection, consider Fidelity Inflation-Protected Bond Index Fund (FIPDX) or Schwab U.S. TIPS ETF (SCHP).
If I wanted to add a little more spice with a little more risk, I’d add some of the supporting players to the 3-4 core index funds/ETFs, perhaps no more than 3 more funds/ETFs. Anything else would be a waste of time.
Say No To Management Fees
If you pay a percentage of your assets to an advisor, you’re paying 5-10 times too much. Learn how to locate an independent advisor and pay solely for advice.
Is FSKAX a mutual fund or an exchange-traded fund?
The Dow Jones U.S. Total Stock Market Index, the index fund’s underlying index, is replicated by FSKAX. In order to duplicate the performance of the Total Stock Market Index, it has 3,390 equities in its mutual fund.
FSKAX’s asset allocation between large-cap, mid-cap, and small-cap equities is identical to the underlying index. As a result, it invests roughly 73 percent in large-cap equities, 18 percent in mid-cap stocks, and 9% in small-cap stocks. Because large corporations account for the majority of money invested in the stock market, it distributes more money to large-cap stocks. It’s evenly split between growth and value stocks.
The fund is the second-largest total stock market index fund, behind VTSAX, with $56.9 billion in assets.
Is Fskax a good investment?
These are the top-performing Fidelity retirement funds over the last ten years.
Your investments have most likely been rattled by recent stock market volatility. Because your portfolio has been so rocked, it may not look like you anticipated, which is why now is the greatest moment to rebalance your retirement account. While many of the funds listed below have outperformed the market over the last ten years as of Feb. 29, many are down over 20% year-to-date. The Fidelity Long-Term Treasury Bond Index Fund, on the other hand, is up 21% year to date. This is where you may rebalance your life: While these beaten-down equity funds are on sale, sell your valued bond funds to purchase more of these beaten-down equity funds. (Note: Depending on your company plan, you may or may not have access to these.) All of these are available in individual retirement accounts if you don’t have one.)
This Morningstar-rated five-star fund is one of Fidelity’s best-performing large growth funds in the last decade. More than 80% of the Fidelity over-the-counter fund’s portfolio is made up of stocks traded on the Nasdaq composite index or over-the-counter markets. Small and medium-sized businesses (SMBs) are more prevalent in OTC markets, which generally offer more opportunities for growth. This explains the fund’s excellent returns, but it also means the investment is more risky. When you consider the lack of transparency and regulation in OTC markets, it’s easy to see why FOCPX is rated as high-risk. Investors should also keep in mind that the fund’s top ten holdings account for about 44% of the whole portfolio, which is nearly 45% invested in the technology sector. This one may be high-performing, but it isn’t particularly diverse.
FNCMX is the best-performing Fidelity product for your retirement if you prefer index funds. The fund’s goal is to replicate the Nasdaq’s performance, which contains over 3,000 stocks. There are 2,065 of them at FNCMX. It’s significantly weighted toward information technology, same like FOCPX but so does the US economy, and FNCMX has a lower IT weighting (33.66 percent) than the Nasdaq Composite Index (41.55 percent ). FNCMX also invests heavily in its top ten holdings (more than 33% of the portfolio), which include well-known companies such as Apple, Amazon, and Microsoft Corp. (MSFT). While FNCMX is another strong performer, combine it with diversification for a less turbulent retirement. Also, at 0.3 percent, FNCMX is on the costly side for an index fund.
According to Fidelity, FXAIX is provided by more than 14,000 of the 23,000 401(k) plans on its platform, making it one of the most accessible Fidelity funds for retirement. It’s also one of Fidelity’s best-performing retirement funds, with a 10-year return of 12.64 percent as of Feb. 29. It has, however, taken a beating, down about 24% year to date, which could indicate a buying opportunity. The Fidelity 500 Index fund is one of the lowest-cost funds among the 10 best-performing Fidelity funds for retirement, with an expense ratio of approximately 0.015 percent. The fund, which was previously known as FUSEX, replicates the S&P 500, making it a good choice for index investors or those seeking a big blend exposure.
Fidelity’s Total Market Index Fund, unlike S&P 500 funds like FXAIX, gives exposure to a broader span of the US stock market. With over 3,400 holdings, FSKAX has a much broader scope than the S&P 500. No single company accounts for more than 4% of the total portfolio. FSKAX is one of the best-performing Fidelity retirement funds providing broad stock market exposure at index-fund pricing. However, Fidelity’s newly launched Zero Total Market Index Fund (FZROX) achieves the same result with no expense ratio. Since the launch of the new zero-expense-ratio funds in 2018, it has also outperformed FSKAX. You won’t find the Zero funds in your 401(k) because most providers don’t add them until they’re at least three years old, but FZROX is available in any Fidelity IRA.
Moving from large-caps to mid-caps now, FDEGX is the best-performing mid-cap fund, focusing on companies with a market capitalization of between $2 billion and $10 billion. While the fund concentrates on medium-sized businesses, the managers may invest in small or large businesses if they believe they have the potential for faster revenue or earnings development. FDEGX’s portfolio now contains more large-caps than mid-caps, with the top ten holdings all exceeding $10 billion in market capitalization. They aren’t, however, your typical suspects. Global Payments (GPN), Fiserv (FISV), and KLA Corp (KLAC) aren’t in many (if any) large-cap funds’ top ten.
The Fidelity Extended Market Index Vehicle is another popular fund in Fidelity 401(k) plans. FSMAX can be a good source of small- and mid-cap stock exposure and a nice complement to a large-cap or S&P 500 index fund because it is benchmarked to the Dow Jones U.S. Completion Total Stock Market Index, which excludes businesses in the S&P 500. With over 3,100 holdings, the top ten of which account for only about 5.4 percent of the portfolio, and representation in every market sector, FSMAX is also highly diversified among smaller companies. If you like the sound of this fund, now is a good moment to invest because it is down more than 30% year to date.
FRESX is the best-performing Fidelity real estate fund over the last decade if you want to include real estate to your retirement portfolio. The fund seeks to combine capital growth with above-average income and a higher yield than the S&P 500. With a yield of 2.62 percent against closer to 2% for S&P 500 funds like FXAIX, it just about makes it. It primarily invests in the common stock of firms involved in the real estate industry or engaged in real estate investing, with the majority of its holdings being industrial, office, and residential real estate. The top ten holdings account for more than half of the portfolio’s assets, which isn’t surprising given the portfolio’s small size of 44 companies.
Is Fskax managed passively?
Fidelity’s Total Market Index Fund is FSKAX. It’s a passively managed mutual fund, which means the fund managers don’t try to pick and choose stocks. Instead, the fund tries to replicate the performance of the Dow Jones US Total Stock Market Index, which includes over 3,500 stocks that account for around 95% of the US stock market.
FSKAX, like the index it mimics, holds roughly 3,500 stocks, accounting for nearly all of the US stock market. FSKAX is cap-weighted, like the index it tracks, which means that the equities that make up the fund are held in proportion to their market capitalization. As a result, the larger the company, the more equities from that company make up the fund.
In practice, this means that the great bulk of the FSKAX is made up of the top 500 publicly traded companies in the United States. Indeed, the top ten holdings in FSKAX, which include well-known major stocks (such as Facebook, Google, Apple, Microsoft, Amazon, and others), account for nearly a quarter of the fund’s assets.
We can get an indication of FSKAX’s long-term growth by looking at the overall US stock market’s return over the last 30 years or so, because it reflects the total US stock market. Since the early 1990s, this increase has looked like this:
Is there a Fskax minimum?
The Schwab Total Stock Market Index Fund attempts to track the total stock market in the United States as measured by the Dow Jones U.S. Total Stock Market Index. As of September 30, 2021, it has $17 billion in total assets. There is no requirement for a minimum investment, and the net expense ratio is only 0.03 percent. As of September 30, 2021, its trailing twelve-month (TTM) yield was 1.41 percent.
What is the difference between an index fund and an exchange-traded fund (ETF)?
The most significant distinction between ETFs and index funds is that ETFs can be exchanged like stocks throughout the day, but index funds can only be bought and sold at the conclusion of the trading day. Despite the fact that they can be traded like stocks, investors can still profit from diversification.
Fnilx or Fxaix: which is better?
I favor FNILX because it has so far done a fantastic job of following the S&P 500. If you have more than $100,000 to invest, I recommend FXAIX; FNILX does not have enough history to guarantee that it tracks the S&P perfectly. I’d also recommend FSPGX, which closely tracks the NASDAQ 100, and Fzilx for overseas funds.
At first, I considered selling my FXAIX and investing the proceeds in FNILX. I don’t have a lot of shares, but if the two are quite similar, might I get a greater return with FNILX since I’ll be able to buy more because it’s cheaper? Or should I just hold on to my FXAIX stock?
FXAIX is a “official” S&P 500 fund that invests in the index’s stocks. FNILX isn’t formally associated with that index, so they don’t have to pay any license costs to Standard & Poor’s, but it does contain similar securities (about 516 last time I checked). This is to keep the ZERO fund’s costs as low as possible.
Is an ETF better than an Index Fund for an Individual Brokerage Account? Consider the comparison between VOO/ IVV and FNILX/ FXAIX.
SPY vs. a Fidelity fund that tracks the SPY, such as FXAIX. Which is preferable for a tax-deferred investment account, and why? Is this different for a Fidelity IRA that is tax-deferred? Thank you very much.
SPY (0.015) is more expensive than FXAIX (0.015). (0.09). I prefer to keep my expenses to a minimum. I don’t require the convenience of selling at any time that an ETF provides. FNILX is similar to FNILX but without the costs.
If Fxaix is held in a taxable account, it will get greater capital gains distributions. If in Ira, there would be no difference in terms of taxes. David explains the various fees. If you want the benefits of an etf, there are alternative etfs in the middle in terms of fees (trade throughout day, minimums, etc)
FNILX makes up nearly a third of my Roth IRA. I acquired it on 2/7/20 for a high price of $11.62, and despite what transpired in March, I’m up 17.5 percent.
Is it wise to invest in Fncmx?
Naturally, investors seek out funds that have a good track record. This fund has a 5-year annualized total return of 24.22 percent, which places it in the top third of its category. If you’re searching for a fund with a shorter time horizon, consider the fund’s 3-year annualized total return of 21.8 percent, which puts it in the top third of all funds over this period.
When analyzing a fund’s performance, the standard deviation of the returns is also significant to consider. The lower the standard deviation, the lower the fund’s volatility. The standard deviation of FNCMX over the last three years is 20.91 percent, which is higher than the category average of 16.93 percent. The fund’s standard deviation over the last five years is 17.12 percent, compared to 14.35 percent for the category. Over the last half-decade, this has made the fund more volatile than its peers.