Fidelity Investments is the nation’s fourth-largest mutual fund manager with more than $4.3 trillion in assets under management, as of March 31, 2022, the most recent information available. Fidelity serves 40 million individual investors through more than 500 mutual funds and ETFs.
A fund’s quality can be approximated using Morningstar’s star ratings, which range from 1 star (lowest quality) to 5 stars (highest). Star ratings are ranked on a curve; the top 10% of funds receive five stars, the next 22.5% receive four stars, the middle 35% receive three stars, the next 22.5% receive two stars, and the bottom 10% receive one star. Here’s a look at three of Fidelity’s funds that are rated 5 stars by Morningstar. All information is accurate as of Q2 2022.
Key points to remember
- Fidelity Funds is one of the largest fund families in the world, with more than $4.3 trillion in client assets under management.
- Fidelity had 40 million investors in 2022 invested in more than 500 funds, including several rated 5 stars by fund tracker Morningstar.
- Highlights include two funds in the Balanced category, Fidelity Balanced and Fidelity Capital & Income.
- Another 5-star fund for investors to consider is the Fidelity Mid Cap Enhanced Index, which tracks the Russell Mid Cap Index.
Balanced Loyalty (FBALX)
Fidelity Balanced Fund (FBALX) invests in a combination of stocks, bonds and cash. Balanced funds are often a good option for investors who wish to have a smaller number of funds, and therefore like the somewhat “all-in-one” approach that a balanced fund offers, or who want a fund that can represent a base on which they can build the rest of their portfolio.
Fidelity Balanced falls in the middle in terms of risk. It is riskier than a pure bond fund, but not as risky as a pure equity fund. It is considered a moderate allocation fund, which means that it offers a medium-risk asset allocation consisting of around two-thirds stocks and one-third bonds.
Since the fund’s inception in 1986, this $41 billion AUM, 5-star fund has posted an average return of approximately 9.34% through Q2 2022. The expense ratio for FBALX is 0.51% and it has a relatively high turnover rate of 0.40, but there is no minimum initial investment amount.
Fidelity Capital & Income (FAGIX)
Fidelity Capital & Income Fund (FAGIX) is another 5-star balanced fund that is much more bond-oriented, with around 75% of the portfolio weighted in a bond allocation. The fund offers a good combination of growth and income. The market risk is higher than that of a pure bond fund but lower than that of a pure equity fund. Long-term returns are higher than those of most bond funds.
The expense ratio for FAGIX is 0.67% with no minimum investment amount. The fund has returned an average annualized rate of 9.41% through the second quarter of 2022.
Fidelity Blue Chip Growth (FBGRX)
A third 5-star Fidelity fund is the Fidelity Blue Chip Growth Fund (FBGRX), a good choice for investors who want exposure to mature, large-cap stocks. FBGRX invests at least 80% in blue chip large cap stocks and the balance in large cap growth opportunities. That gives it a touch of active management on something like the S&P 500 index.
The expense ratio for FBGRX is 0.79% with no minimum investment and a turnover ratio of 0.41. The fund has returned 12.2% per year, on average, since its inception.
What does it mean to be a Morningstar 5-star fund?
According to Morningstar, funds that qualify for a five-star rating are those with risk-adjusted returns in the top 10% of peers in the category.
Are loyalty funds good for beginners
Yes. There are Fidelity funds that are suitable for beginners, as well as those who are more financially savvy. Fidelity is known for offering low-cost investment options that can attract new investors, including low-cost index ETFs.
What is the largest Fidelity mutual fund?
In terms of assets under management (AUM), the Fidelity 500 Fund (FXAIX) is Fidelity’s largest. This S&P 500 index fund has $375 in assets and a very low expense ratio of 0.015%.