Fidelity Investments is the country’s fourth-largest mutual funds manager with more than $4.3 trillion in assets under management, as of March 31, 2022, the most recently available information. Fidelity serves 40 million individual investors across more than 500 mutual funds and ETFs.
The quality of a fund can be approximated using Morningstar’s star ratings, which ranges from 1 star (the lowest quality) to 5 stars (the highest). Star ratings are graded 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% get 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 Takeaways
- Fidelity Funds is one of the biggest fund families in the world, with more than $4.3 trillion in total customer assets under management.
- Fidelity had 40 million investors in 2022 invested in more than 500 funds, several of them rated 5 stars by fund tracker Morningstar.
- Among the highlights are 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.
Fidelity Balanced (FBALX)
The Fidelity Balanced Fund (FBALX) invests in a mix of stocks, bonds and cash. Balanced funds are often a good option for investors who either want to have a smaller number of funds, and therefore like the somewhat “all in one” approach a balanced fund offers, or who want a fund that can represent a base upon which they can build the rest of their portfolio.
Fidelity Balanced falls in the middle in terms of riskiness. It is riskier than a pure bond fund, but not as risky as a pure stock fund. It is considered to be a moderate allocation fund, meaning it offers a medium-risk asset allocation that is roughly two-thirds stocks and one-third bonds.
Since the fund’s inception in 1986, this $41 billion AUM, 5-star fund has seen an average return of roughly 9.34% through Q2 2022. The expense ratio for FBALX is 0.51% and it has a relatively high 0.40 turnover ratio, but there is no minimum initial investment amount.
Fidelity Capital & Income (FAGIX)
The Fidelity Capital & Income Fund (FAGIX) is another 5-star balanced fund that is tilted much more heavily toward bonds, with roughly 75% of the portfolio weighted to a bond allocation. The fund provides a good mix of growth and income. The market risk is higher than that of a pure bond fund but lower than that of a pure stock fund. Long-term returns are higher than most bond funds.
The expense ratio for FAGIX is 0.67% with no minimum investment amount. The fund has returned an annualized average rate of 9.41% through Q2 2022.
Fidelity Blue Chip Growth (FBGRX)
A third 5-star Fidelity fund is the Fidelity Blue Chip Growth fun (FBGRX), a good choice for investors who want exposure to mature, large-cap stocks. FBGRX invests at least 80% in large-cap blue-chip stocks and the balance in large-cap growth opportunities. This gives it an actively-managed twist 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 inception.
What Does it Mean to Be a 5-Star Fund from Morningstar?
According to Morningstar, funds that qualify for a five-star rating are those whose risk-adjusted returns fall within the top 10% relative to category peers.
Are Fidelity Funds Good for Beginners
Yes. There are Fidelity funds that are good for beginners, and also those who are more financially savvy. Fidelity is known for offering low-cost investing options that may appeal to 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 ration of 0.015%.