Best Fidelity Index Funds for October 2024
Written by
Harry Hoover
Edited by
Elizabeth Constantineau
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Fidelity index funds provide investors with a simple, low-cost method of diversifying their portfolios across several sectors of the market. The aim of an index fund is to track the returns of a stock market index, such as the S&P 500 or Russell 2000. Index funds can come in different forms, including mutual funds and ETFs. An index fund might buy all of the securities that comprise an index or just a representative sample.
Some investors pick a few stocks and hope for a couple of big winners, but the index fund investor buys and holds a wide range of securities, hoping to ride the wave of long-term market growth. This makes index funds more stable and better suited for retirement investments. Just keep in mind that, as with any investment, the money you put into an index fund is always at risk of losing value.
Best Fidelity Index Funds
Here are some of the best Fidelity index funds:
- Fidelity Multi-Asset Index Fund (FFNOX)
- Fidelity Nasdaq Composite Index Fund (FNCMX)
- Fidelity Large Cap Growth Index Fund (FSPGX)
- Fidelity 500 Index Fund (FXAIX)
- Fidelity Total Market Index Fund (FSKAX)
- Fidelity U.S. Sustainability Index Fund (FITLX)
This evaluation of the top Fidelity index funds to buy looked at several measures of performance. You’ll find the following information associated with each of these Fidelity funds:
- Fund overview
- Average annual returns
- Expense ratio
- Level of risk
- Top five holdings
1. Fidelity Multi-Asset Index Fund (FFNOX)
Previously called the Fidelity Four-in-One Index Fund, the Multi-Asset Index Fund invests in seven Fidelity stock and bond index funds, allocating assets to achieve broad diversification. The fund has a 50.88% weighting in domestic equity funds, with an additional 24.32% in developed market equity funds, 9.89% in emerging market equity funds, 6.93% in U.S. investment grade bond funds, 5.03% in long-term U.S. Treasury bond funds and 2.92% in international bond funds.
- Average annual returns:
- 14.21% year to date
- 27.95% one year
- 6.06% three years
- Expense ratio: 0.13%
- Risk: Average — 5 on a scale of 1 to 10
- Top five holdings: Fidelity 500 Index Fund, Fidelity International Index Fund, Fidelity Emerging Markets Index Fund, Fidelity Extended Market Index Fund, Fidelity U.S. Bond Index Fund
2. Fidelity Nasdaq Composite Index Fund (FNCMX)
This fund is designed to closely track the price and yield of the Nasdaq Composite Index. Fidelity normally invests at least 80% of the assets into common stocks included in the index. The fund is heavily skewed toward technology, with 50.30% of the fund in information technology and an additional 14.44% in communication services.
- Average annual returns:
- 20.01% year to date
- 38.75% one year
- 9.07% three years
- Expense ratio: 0.29%
- Risk: Above-average — 6 on a scale of 1 to 10
- Top five holdings: Apple, Microsoft, Nvidia, Amazon, Meta
3. Fidelity Large Cap Growth Index Fund (FSPGX)
This fund invests at least 80% of its assets into securities included in the Russell 1000 Growth Index, with a focus on large-cap growth stocks. Industry weightings in the fund closely mirror those of the Russell 1000 Growth Index, with 48.80% in information technology, 13.45% in consumer discretionary stocks and 12.55% in communication services.
- Average annual returns:
- 22.92% year to date
- 42.19% one year
- 12.00% three years
- Expense ratio: 0.035%
- Risk: Above-average — 6 on a scale of 1 to 10
- Top five holdings: Apple, Microsoft, Nvidia, Amazon, Meta
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4. Fidelity 500 Index Fund (FXAIX)
The purpose of the fund is to track the returns of the most popular market index, the S&P 500. At least 80% of assets are invested in stocks included in the S&P 500 index.
- Average annual returns:
- 20.75% year to date
- 36.33% one year
- 11.90% three years
- Expense ratio: 0.015%
- Risk: Above-average — 6 on a scale of 1 to 10
- Top five holdings: Apple, Microsoft, Nvidia, Amazon, Meta
5. Fidelity Total Market Index Fund (FSKAX)
Managers of this fund aim for investment returns that track the total return of a broad range of domestic equities. With that in mind, they put 80% of the fund’s assets into securities included in the Dow Jones U.S. Total Stock Market Index. The fund has a more diversified composition than some of the tech-heavy funds on this list, with just 29.19% in information technology stocks and 13.88% in financials. Healthcare and consumer discretionary stocks comprise 12.20% and 9.84% of the portfolio, respectively.
- Average annual returns:
- 19.24% year to date
- 35.27% one year
- 10.15% three years
- Expense ratio: 0.015%
- Risk: Above-average — 6 on a scale of 1 to 10
- Top five holdings: Apple, Microsoft, Nvidia, Amazon, Meta
6. Fidelity US Sustainability Index Fund (FITLX)
This fund tracks the MSCI USA ESG Index, which targets mid- and large-cap companies with positive environmental, social and governance performance relative to their peers. This makes the fund, and its underlying index, a bit unique in that it could, theoretically, own stocks in any industry and doesn’t follow a specific style classification. As of now, the fund has a large-growth tilt, with 29.99% in information technology, 14.13% in multi-sector, 10.40% in healthcare and 10.62% in financials.
- Average annual returns:
- 19.86% year to date
- 36.12% one year
- 11.82% three years
- Expense ratio: 0.11%
- Risk: Above-average — 6 on a scale of 1 to 10
- Top five holdings: Nvidia, Microsoft, Alphabet Class A, Alphabet Class C, Eli Lilly & Co.
Pros and Cons of Fidelity Index Funds
Fidelity index funds feature comparatively low costs well suited to buy-and-hold investors. Fidelity equity funds combine low expenses and good growth potential with index funds heavily tilted toward technology and consumer discretionary stocks. Bond funds provide a lower-risk option.
Investors looking for index funds that follow U.S. bond indexes and stock indexes of all market cap sizes, international equity markets, emerging markets and even bonds should consider Fidelity. You get a wide range of choices — including sustainable index stock and bond funds — allowing you to construct an asset-allocated portfolio just right for your needs and investment timeline. Some of the best Fidelity index funds even pay dividends.
One thing to note with index funds, whether from Fidelity or another brokerage or investment firm, is that you won’t get active management. While the funds are low-cost and do a good job of tracking their underlying indexes, you are guaranteeing yourself an “average” performance, as there aren’t any stock- or bond-picking managers that can add value and potentially outperform. Also, not all of Fidelity’s index funds are ultra-low cost, despite the firm’s overall success in this area.
Still, index funds make sense for the average investor looking toward retirement. As famed stock picker Warren Buffett says, an index fund is a good way to avoid the risk of picking individual stocks and the effects of fees and expenses on your investments.
How To Invest In Fidelity Index Funds
Here’s a look at the steps you’ll need to take to invest in Fidelity index funds.
1. Open a Brokerage Account
Before you can invest in Fidelity index funds, you’ll need to open a brokerage account. The account doesn’t have to be with Fidelity, but Fidelity offers a collection of zero-expense-ratio index funds that are available only to investors who purchase shares through a Fidelity account.
2. Fund Your Brokerage Account
The next step is to fund your account with the money you’ll use to purchase investments. Linking your brokerage account to a bank account is an easy way to do it. Just select that option from your account on the brokerage website and then enter your bank information. You can transfer money into the brokerage account as soon as the broker verifies your bank routing and account numbers.
3. Search for Fidelity Index Funds
Brokerage websites typically have an investment screening feature that lets you search for funds to invest in. On Fidelity’s platform, you select the “News & Research” navigation link and then select “Mutual Funds.”
The screener page will have search criteria you can select to narrow the choices. Select Fidelity as the funds provider, and select “Index” as the type of fund management. You can further narrow the results by selecting additional criteria. The search should generate a list of funds that meet your criteria.
4. Place Your Order
With the fund you want to invest in showing on your screen, look for a button that says “Buy” or “Trade.” Selecting that button will take you to an order page. Follow the prompts to place your order.
FAQ
Fidelity index funds all track a particular index, but that's where the similarities end. Find out more about them with these frequently asked questions.- Are Fidelity index funds a good investment?
- Fidelity index funds can be a good choice for investors whose investment goals and risk tolerance are a good fit for the specific fund they're considering investing in. If in doubt, consider meeting with a fiduciary financial planner who can make recommendations based on your individual situation.
- What types of funds should you invest in through a Fidelity Roth IRA?
- A Roth IRA is a long-term account designed for retirement savings. As such, it makes sense to keep growth investments in an IRA. However, given the tax benefits of a Roth IRA, funds that provide a large amount of income or capital gains can also be of benefit. In a regular taxable account, for example, you'll have to pay taxes every year on any income or capital gains distributions. But if you keep these types of funds in your Roth IRA, you may never have to pay tax on them, assuming you withdraw them after age 59 1/2 and you've held the account for at least five years.
- What type of fund is best for a Roth IRA?
- You can invest in nearly any type of fund you'd like to in your Roth IRA. You'll get the most tax benefits, however, from funds that make a lot of taxable distributions, such as bond funds or growth funds that make a lot of capital gains payouts.
- Which Fidelity fund has the highest return?
- Over the past three- and five-year periods, the Fidelity fund with the highest average annual return is the Fidelity Select Semiconductors Portfolio (FSELX). The fund has averaged an incredible 27.28% and 34.60% annually over the past three- and five-year periods.
- What Fidelity funds beat the S&P 500?
- Multiple Fidelity funds have outperformed the S&P 500 over one, three, five and 10 years, including the following:
- Fidelity Select Semiconductors Portfolio (FSELX)
- Fidelity Select Energy Portfolio (FSENX)
- Fidelity Select Insurance Portfolio (FSPCX)
- Fidelity Select Construction and Housing Portfolio (FSHOX)
- Multiple Fidelity funds have outperformed the S&P 500 over one, three, five and 10 years, including the following:
Daria Uhlig and John Csiszar contributed to the reporting for this article.
Data is accurate as of Oct. 4, 2024, and is subject to change.
Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.
