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The Best Performing Fidelity Funds for Retirement

Coryanne Hicks

These are the best Fidelity funds by performance for your Fidelity 401(k).

Fidelity Investments is a powerhouse in retirement planning. Investors put more into Fidelity 401(k)s than Japan's $5.4 trillion gross domestic product. Although stock funds are usually your best bet for high returns, investing entirely in stock may not be the best retirement strategy, so keep an eye on risk as you evaluate these Fidelity retirement funds. What follows are 10 of the best Fidelity funds for retirement that are available inside and outside of Fidelity 401(k)s, based on their 10-year performance as of Dec. 31. (Note: It is up to your company which funds are available in your 401(k). You may or may not have access to these in your company plan. If you do, you'll probably see the K-class version inside your 401(k). If you don't, all of them are available in IRAs.)

Fidelity OTC Portfolio (ticker: FOCPX)

The Fidelity OTC fund invests more than 80% of its portfolio in stocks trading in the Nasdaq composite index or over-the-counter markets. OTC markets have more small- and medium-sized companies, which generally offer more growth opportunities. That explains the high returns of this fund, but it also comes with more risk. Add lower transparency and regulation on OTC markets, and it's easy to see why FOCPX gets a high-risk rating. Investors should also note the fund's top 10 holdings account for over 44% of the overall portfolio, which is more than 43% in the technology sector. High-performing this one may be, but highly diversified in comparison to other index funds it is not.

10-year average annual returns: 17.11%

Net expense ratio: 0.89%

Risk: high versus U.S. large growth category

Fidelity Nasdaq Composite Index Fund (FNCMX)

If you favor index funds, the best performing Fidelity fund for retirement is FNCMX. The fund aims to track the performance of the Nasdaq, which includes more than 3,000 stocks. FNCMX holds 2,089 of them. As with FOCPX, it's heavily weighted toward information technology -- but then, so is the U.S. economy. FNCMX also carries a lot of its weight in its top 10 holdings (over 33% of the portfolio), which include familiar names like Apple (AAPL), Amazon.com (AMZN), Microsoft Corp. (MSFT), and two classes of Google's parent company, Alphabet, (GOOG, GOOGL). So while FNCMX is another high performer, order this one with a side of diversification for a less volatile retirement. Also of note is the fact that for an index fund, FNCMX is on the expensive side at 0.3%.

10-year average annual returns: 15.85%

Net expense ratio: 0.3%

Risk: above average versus U.S. large growth category

Fidelity Blue Chip Growth Fund (FBGRX)

It's not easy to find blue-chip companies with big growth potential; giants can only grow so much bigger, after all. But this is exactly what the managers of FBGRX aim to do. This blue-chip growth fund targets large blue-chip companies in the S&P 500 and Dow Jones Industrial Average. From those criteria, management takes only the companies it feels offer above-average growth potential. Bear in mind this means the fund is heavily invested in information technology (almost 37% of the total portfolio) and consumer discretionary (over 21% of the total portfolio).

10-year average annual returns: 15.84%

Net expense ratio: 0.8%

Risk: above average versus U.S. large growth category

Fidelity Growth Discovery Fund (FDSVX)

The managers of FDSVX invest fund assets in companies the Fidelity Management & Research Co. believes to have above-average growth potential. Thus far, they've done a pretty good job. FDSVX returned a tidy 15.45% between 2009 and 2019, making it one of the top performing Fidelity funds for retirement. Apparently the most growth potential resides in the information technology sector, however, as this makes up almost 40% of the portfolio. Likewise, with the top 10 of FDSVX's 123 holdings accounting for over 44% of the total portfolio, this is not the most diversified fund for retirement. If you choose to invest in it, make sure you aren't overexposing yourself to its top 10 holdings or information technology in general.

10-year average annual returns: 15.45%

Net expense ratio: 0.77%

Risk: average versus U.S. large growth category

Fidelity Contrafund (FCNTX)

Contrarians and value investors rejoice: FCNTX is a fund after your heart. It invests in companies management believes to be undervalued relative to revenue or earnings growth prospects. These companies are largely in information technology and include Amazon, Facebook (FB), and Berkshire Hathaway A shares (BRK.A) as its top three holdings. Contrafund is the largest actively managed fund. It ranks No. 95 in the large growth category and 6.9 out of 10 overall, according to U.S. News & World Report.

10-year average annual returns: 13.96%

Net expense ratio: 0.82%

Risk: average versus U.S. large growth category

Fidelity 500 Index Fund (FXAIX)

FXAIX is offered by over 14,000 of the 23,000 401(k) plans on Fidelity's platform, according to the company, making it one of the most accessible Fidelity funds for retirement. It also happens to be among the best performing Fidelity funds for retirement with a 10-year return of 13.54% as of Dec. 31. With a tidy expense ratio of only 0.015%, the Fidelity 500 Index fund is one of the lowest-cost fund of these 10 best performing Fidelity funds for retirement. Formerly FUSEX, the fund replicates the S&P 500, making it a nice option for index investors or those looking for large blend exposure.

10-year average annual returns: 13.54%

Net expense ratio: 0.015%

Risk: average versus U.S. large blend category

Fidelity Total Market Index Fund (FSKAX)

Fidelity's Total Market Index Fund provides exposure to a broader swath of the U.S. stock market than S&P 500 funds like FXAIX. With almost 3,500 holdings, FSKAX reaches far beyond the S&P 500 companies. It does still limit companies to those with market values greater than $10 billion, though, so it's still a large-cap fund. But no single company makes up more than 4% of the overall portfolio. For broad stock market exposure at index-fund pricing, FSKAX is definitely one of the best performing Fidelity funds for retirement.

10-year average annual returns: 13.42%

Net expense ratio: 0.015%

Risk: average versus U.S. large blend category

Fidelity Extended Market Index Fund (FSMAX)

Another popular fund in Fidelity 401(k) plans is the Fidelity Extended Market Index Fund. And this one provides small- and mid-cap exposure. It's benchmarked to the Dow Jones U.S. Completion Total Stock Market Index, which excludes companies in the S&P 500. This can make it a nice complement to a large-cap or S&P 500 index fund. FSMAX is also highly diversified among those smaller companies with over 3,100 holdings, the top 10 of which account for only about 5.4% of the portfolio, and representation in every market sector.

10-year average annual returns: 12.85%

Net expense ratio: 0.045%

Risk: above average versus U.S. mid-cap blend category

Fidelity Balanced Fund (FBALX)

For a less aggressive approach to retirement investing, consider the Fidelity Balanced Fund. FBALX invests about 40% of its portfolio in fixed-income securities like bonds and other debt investments. These are primarily investment-grade credit, mortgage pass-through securities and U.S. Treasurys. With this more conservative approach to investing comes more conservative returns, however. FBALX finished the 2010s decade with just over a 10% average annual return. So FBALX is more of a best performing Fidelity fund for semi-conservative retirement investors, as opposed to best performing overall. That said, it's a five-star fund from Morningstar and earned a score of 8.3 out of 10 from U.S. News & World Report.

10-year average annual returns: 10.01%

Net expense ratio: 0.53%

Risk: above average versus U.S. allocation 50% to 70% equity category

Fidelity Zero Expense Index Funds

In 2018, Fidelity debuted a lineup of zero expense ratio, zero minimum index mutual funds: the Fidelity Zero Large Cap Index Fund (FNILX), Fidelity Zero Extended Market Index (FZIPX), Fidelity Zero Total Market Index Fund (FZROX) and Fidelity Zero International Index Fund (FZILX). Being nascent funds, these don't have the track record of others on this list. They also aren't likely to be included in 401(k) plans yet as most plan sponsors wait for a fund to be at least three years old before adding it to their plan. But with no investment minimum and no expense ratio to contend with, these can be good Fidelity funds for retirement investing outside of your employer-sponsored plan.

The best performing Fidelity funds for retirement.

These are 10 of the best performing Fidelity funds for retirement that you can use inside or outside your Fidelity 401(k):

-- Fidelity OTC Portfolio (FOCPX)

-- Fidelity Nasdaq Composite Index Fund (FNCMX)

-- Fidelity Blue Chip Growth Fund (FBGRX)

-- Fidelity Growth Discovery Fund (FDSVX)

-- Fidelity Contrafund (FCNTX)

-- Fidelity 500 Index Fund (FXAIX)

-- Fidelity Total Market Index Fund (FSKAX)

-- Fidelity Extended Market Index Fund (FSMAX)

-- Fidelity Balanced Fund (FBALX)

-- Fidelity Zero Expense Ratio Index Funds



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