Best Fidelity mutual funds with top performance: 500 Index Fund (FUSEX), Nasdaq Composite Index Fund (ONEQ), International Small Cap Fund (FISMX), and Real Estate Investment Fund (FRESX)

Best Fidelity Funds for IRA's Overview

Known for reasonable fees and great customer service, Fidelity Investments also has a good selection of mutual funds and ETF's. Several of these would be a wise choice for any account from Traditional IRA companies list above. In particular, the following four funds are highly rated and have a history of admirable performance.


Fidelity's 500 Index Fund (FUSEX)

The S&P 500 stock index has a long history of outperforming other investments over the long term without taking on excessive risk. Fidelity's 500 Index Fund tracks this index with passive management. As such, FUSEX has a very low expense ratio of just 0.10%. The portfolio has over $100 billion in assets, placing this mutual fund in the very large category. The fund's turnover ratio is only 5%, which means it doesn't buy and sell too frequently. The security has an annualized 5-year return rate of 14.5%.

Morningstar has ranked FUSEX five starts for past performance and gold for future possibility. Both these grades are the analyst's highest rankings. The fund's past performance is regarded as above average, while the portfolio's risk is considered average. FUSEX pays distributions quarterly. Its current yield is almost 2%. The fund is no load and has a $2,500 minimum purchase amount. It can be bought at Fidelity with no transaction fee.


Best Fidelity Mutual Funds


Fidelity's Nasdaq Composite Index Fund (ONEQ)

Investors who don't plan to retire in the near future and can take on a little more volatility than what the S&P typically generates might want to consider Fidelity's Nasdaq Composite Index Fund. This exchange-traded fund tracks the Nasdaq Composite index using passive management. At least 80% of the portfolio must be invested in the benchmark. The average stock in ONEQ has a market cap of $36 billion, which is much lower than the fund's category and benchmark.

ONEQ has received 5 stars from Morningstar. The analyst views the fund's return history as high, while its risk is above average. Morningstar's rank of high is higher than above average. The portfolio has an overweight in growth stocks and an underweight in value stocks. ONEQ has a consistent history paying quarterly dividends. It currently is yielding around 1% per annum.

The fund's worst year was in the very difficult 2008, when it went down 39.8%. Its best performance was the following year when it returned 45.1%. ONEQ's 10-year annualized performance is 18.36%, which is higher than the S&P 500. On a 5-year basis, ONEQ's price performance has outstripped PowerShares's more famous QQQ by more than 150 basis points.


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Fidelity's International Small Cap Fund (FISMX)

Investors who are a little more adventurous should consider Fidelity's International Small Cap Fund. Small cap equities have a history of outperforming their large cap counterparts over a decade or longer. A fund of global stocks would also help to diversify a portfolio that only has U.S. securities. Unlike the previous two funds, FISMX is actively managed. It looks at a stock's fundamental data, such as earnings and balance sheet, to make a decision on buying or selling. The fund's turnover ratio is 36%, which is fairly low for an actively-managed fund. The mutual fund's expense ratio is 1.31%, which is about average for this type of product.

Over 90% of the portfolio holdings are in non-US equities. Most of these are in the UK, Japan, and the Eurozone. Smaller holdings are from Latin America, Africa, and Australasia. The vast majority of stocks are from developed countries. The fund has an underweight in real estate and an overweight in financials.

Lipper has graded FISMX a 5, the analyst's highest grade, for overall performance. The fund also received a 5 for its expense ratio over a 10-year period. It has consistently beat both its benchmark and its category over YTD, 1, 3, 5, and 10-year periods. Its 5-year annualized performance, 5.80%.


Best Fidelity Index Funds


Fidelity's Real Estate Investment Fund (FRESX)

It's always a good idea to diversify a retirement account across asset classes. Real estate over time has performed well and makes a nice complement to equities. Fidelity's Real Estate Investment Fund invests all $5 billion of its assets in real estate investment trusts (REIT's). These securities are required by U.S. tax law to distribute at least 90% of its income every year in dividends. FRESX does so every three months. Lately, it has been yielding around 2%.

Lipper has graded the mutual fund a 5 for overall performance. The fund also has a 5 for its expense ratio, which is a nice 0.78%. FRESX has outperformed both its category and its benchmark over YTD, 1, 3, 5, 10, and 15-year periods. That's 12 out of 12 comparisons. The fund's annualized return over a 5-year period is 9.86%. This figure is more than 350 basis points higher than the return of the Dow Jones Industrial Average. Like other Fidelity funds, FRESX can be purchased on Fidelity's website without paying a transaction fee.


Top Fidelity Index Fund


Best Fidelity Mutual Funds Summary

Fidelity's (Fidelity account review) top-performing funds have a lot to offer retirement savers. With a wide selection of products, diversification is also trouble-free. Even better, the broker's funds can be purchased without commissions in a no-fee Fidelity IRA. They are also available at all Traditional IRA companies listed in this article.


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