The Best Fidelity Index Funds (Updated 2022)

The incredible levels of volatility in the stock market have led to many investors getting shaken up majorly. The turbulence has been so bad that your portfolio might be looking absolutely  nothing like what you might have intended. However, this isn’t the time to panic. This is the ideal time to rebalance your portfolio, especially the one meant for your retirement. Fidelity Index Funds will come very handy in this situation. While many funds have suffered a downturn in fortunes, the Fidelity Long-Term Treasury Bond Index Fund is up 21% year-to-date. You can use this opportunity to rebalance your portfolio. You can sell the bond funds which have appreciated and use that money to purchase more of these low priced equity funds while they are still available. Let’s get started.

Here Are the Best Fidelity Index Funds for You:

Fidelity OTC Portfolio (FOCPX)

Kicking off our list of the best Fidelity Index funds for you, is Fidelity OTC Portfolio (FOCPX). This five-star Morningstar-rated fund is among the best-performing large growth Fidelity funds in the past decade. The Fidelity over-the-counter fund invests more than 80% of its portfolio in stocks trading in the Nasdaq composite index or over-the-counter markets. The lower transparency and regulation on OTC markets is the main reason why the FOCPX is considered so risky. Investors should also remember that the fund’s top 10 holdings account for nearly 44% of the overall portfolio, 45% of which is then invested in the technology sector. While this fund has performed very well over the years, it isn’t really what we’d call diversified.

10-year average annual returns: 16.96%

Net expense ratio: 0.89%

Fidelity Extended Market Index Fund (FSMAX)

Next on our list of the best fidelity index funds for you to buy is Fidelity Extended Market Index Fund (FSMAX). Another popular fund in Fidelity 401(k) plans is the Fidelity Extended Market Index Fund. Benchmarked to the Dow Jones U.S. Completion Total Stock Market Index, which excludes companies in the S&P 500, FSMAX can be a good source of small- and mid-cap stock exposure and a nice complement to a large-cap or S&P 500 index fund. FSMAX is also highly diversified among those smaller companies with more than 3,100 holdings, the top 10 of which account for only about 5.4% of the portfolio, and representation in every market sector. If you like the sound of this fund, now could be the time to buy as it’s down more than 30% year-to-date.

10-year average annual returns: 11.61%

Net expense ratio: 0.045%

Fidelity 500 Index Fund (FXAIX)

Next on our list of the best fidelity index funds for you to buy is Fidelity 500 Index Fund (FXAIX).

FXAIX is offered by more than 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 12.64% as of Feb. 29. It has taken a beating, however, down almost 24% year-to-date, which could signal a buying opportunity. With a tidy expense ratio of only 0.015%, the Fidelity 500 Index fund is one of the lowest-cost funds of the 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: 12.64%

Net expense ratio: 0.015%

Fidelity Nasdaq Composite Index Fund (FNCMX)

Next on our list of the best fidelity index funds for you to buy is If you favor index funds, the best-performing Fidelity fund for your retirement is FNCMX. The fund aims to track the performance of the Nasdaq, which includes more than 3,000 stocks. FNCMX holds 2,065 of them. As with FOCPX, it’s heavily weighted toward information technology – but then, so is the U.S. economy, and FNCMX has more in the Nasdaq Composite Index (41.55%) than IT (33.66%). FNCMX also carries a lot of its weight in its top 10 holdings (more than 33% of the portfolio), which include familiar names like Apple, Amazon and Microsoft Corp. (MSFT). This fund definitely performs well, but you will be better off having some diversification if you want your retirement fund to have less volatility. Also note that for an index fund, FNCMX is on the expensive side at 0.3%.

10-year average annual returns: 15.47%

Net expense ratio: 0.3%

Fidelity Total Market Index Fund (FSKAX)

Next on our list of the best fidelity index funds for you to buy is Fidelity’s Total Market Index Fund (FSKAX). This fund provides exposure to a broader swath of the U.S. stock market than S&P 500 funds like FXAIX. With more than 3,400 holdings, FSKAX reaches far beyond the S&P 500. No single company makes up more than 4% of the overall portfolio. FSKAX is definitely one of the best-performing Fidelity funds for retirement. It has also outperformed FSKAX since 2018, when the new zero-expense ratio funds debuted. You likely won’t find the Zero funds in your 401(k), as most providers wait until funds are at least 3 years old before adding them, but FZROX is available in any Fidelity IRA.

10-year average annual returns: 12.46%

Net expense ratio: 0.015%

Fidelity Real Estate Investment Portfolio (FRESX)

Next on our list of the best fidelity index funds for you to buy is Fidelity Real Estate Investment Portfolio (FRESX). If you want to add real estate to your retirement portfolio, the best-performing Fidelity real estate fund in the past decade is FRESX. The fund aims for capital growth with above-average income and a yield more than that of the S&P 500. It’s managing to do that but barely, with a yield of 2.62% versus closer to 2% on S&P 500 funds like FXAIX. It invests primarily in the common stock of companies in the real estate industry or engaged in real estate investing, with the bulk being industrial and offices or residential. Over half of the portfolio’s assets are in its top 10 holdings, but then with only 44 companies in the entire portfolio, this isn’t too surprising.

10-year average annual returns: 11.3%

Net expense ratio: 0.74%

Fidelity Growth Strategies Fund (FDEGX)

Next on our list of the best fidelity index funds for you to buy is Fidelity Growth Strategies Fund (FDEGX). Moving from the large-cap category into mid-caps now, which generally target companies with between $2 billion and $10 billion in market capitalization, FDEGX is the best-performing mid-cap fund. While it focuses on medium-sized companies, the fund may invest in small or large companies as well, provided the managers believe they offer the potential for accelerated revenue or earnings growth. FDEGX currently has more large-caps than mid-caps in its portfolio, with its top 10 holdings being well over the $10 billion market capitalization mark. That said, they aren’t your usual suspects. Names like Global Payments (GPN), Fiserv (FISV) and KLA Corp (KLAC) don’t make the top 10 of many (if any) large-cap funds.

10-year average annual returns: 12.08%

Net expense ratio: 0.56%

Fidelity Balanced Fund (FBALX)

Rounding off our list of the best fidelity index funds for you to buy is 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. Right now, it’s just less than 30% in fixed income, which explains why Morningstar gives it a high risk rating compared with the 50% to 70% asset allocation category average. Its fixed income is primarily investment-grade credit, U.S. Treasurys and mortgage pass-through securities. With this more conservative approach to investing comes more conservative returns, however. FBALX rounded out the past decade with a 9.56% average annual return. So FBALX is more of a best-performing Fidelity fund for semi-conservative retirement investors. That said, it’s a five-star fund from Morningstar and earned a score of 8.7 out of 10 from U.S. News & World Report.

10-year average annual returns: 9.56%

Net expense ratio: 0.53%

So those were the best Fidelity Index funds for you to buy. They are an extremely popular choice for a lot of 401(k) funds. You should also try them out if you are looking to bolster your retirement corpus and live out your retirement with peace and comfort.

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