The 7 Best Fidelity Funds for Retirees

At the end of 2021, Fidelity had over $2 trillion in assets under management. Many retail investors include mutual funds as well exchange-traded funds (ETFs) offered by Fidelity in their long-term portfolios.

Growing interest rates, macroeconomic worries and geopolitical concerns have put significant pressure on Wall Street. As a result, many stocks have declined significantly, offering better value compared to the start of the year.

For instance, the S&P 500 has lost around 15% since January. Meanwhile, the S&P 500 Growth Index has declined about 21.5%.

With this in mind, these seven Fidelity mutual funds and ETFs could appeal to a wide range of investors, including retirees. A number of these Fidelity funds could help them grow investment capital further, while others offer current income.

FCNTX Fidelity Contrafund $14.63
FDIG Fidelity Crypto Industry and Digital Payments ETF $18.55
FXAIX Fidelity 500 Index Fund $144.01
FSPHX Fidelity Select Health Care $28.08
FSUTX Fidelity Select Utilities $108.91
FSMO Fidelity Small-Mid Cap Opportunities ETF $20.87
FDVLX Fidelity Value Fund $13.70

Best Fidelity Funds for Retirees: Fidelity Contrafund (FCNTX)

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52-Week Range: $12.97-$20.90

Expense Ratio: 0.81% per year, or $81 on an initial $10,000 investment

The first fund we will be discussing is the Fidelity Contrafund (MUTF:FCNTX). Fund managers invest in businesses whose values they believe are not fully recognized by the market. These companies could be both growth and value stocks.

FCNTX, which tracks the S&P 500, has 342 holdings. Over 90% of the businesses are based in the U.S.

Information technology shares have the largest slice with 24.41%. Then come names in healthcare with 15.87%, communication services with 14.89%, financials with 14.44%, and consumer discretionary with 10.93%.

The top 10 stocks in the portfolio constitute around half of the $97.1 billion in total net assets. Among them are Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B), Meta (NASDAQ:META), Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT) and UnitedHealth (NYSE:UNH).

The fund is down around 21% this year. Investors who expect the bear market may soon be behind us could find value around these levels.

Fidelity Crypto Industry and Digital Payments ETF (FDIG)

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52-Week Range: $12.16-$25.72

Expense Ratio: 0.39%

In 2021, cryptocurrencies and companies that invest in related crypto and blockchain technologies were in the limelight. But 2022 has become the year when the bubble burst. For instance, Bitcoin (BTC-USD) and Ethereum (ETH-USD) have both lost about half of their value year to date.

As a result, many analysts suggest the crypto space offers long-term value. The Fidelity Crypto Industry and Digital Payments ETF (NASDAQ:FDIG) invests in securities at the center of cryptocurrency, blockchain technology and digital payments processing.

FDIG started trading in April 2022 and net assets are about $16.2 million. Since it is a new and small fund, potential FDIG investors should do further due diligence before buying.

With 39 holdings, FDIG tracks the returns of the Fidelity Crypto Industry and Digital Payments Index. In terms of segments, we see IT services with 49%, software with 28% and capital markets with 18%. About half of the portfolio is in the top 10 names. 

The top 10 holdings in the portfolio comprise around half FDIG’s portfolio. Among them are Block (NYSE:SQ), Coinbase (NASDAQ:COIN), Marathon Digital (NASDAQ:MARA), Riot Blockchain (NASDAQ:RIOT) and Bakkt (NYSE:BKKT).

Around three-quarters of the companies come from the U.S. Next come those from Canada, France, Uruguay, Brazil and Italy.

Since inception, FDIG has lost about a third of its value. Trailing price-earnings (P/E) and price-book (P/B) ratios are at 7.27x and 0.88x, respectively. Those investors whose portfolios can handle short-term volatility could consider having a small exposure to the crypto space via a fund like FDIG.

Best Fidelity Funds for Retirees: Fidelity 500 Index Fund (FXAIX)

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52-Week Range: $127.73- $166.37

Expense Ratio: 0.015%

The third fund on our list is another mutual fund, the Fidelity 500 Index Fund (MUTF:FXAIX) which tracks the returns of the S&P 500. The fund started trading in 2011, and net assets are at $374 billion.

With regards to industry exposure, we see IT (26.74%), healthcare (15.09%) and financials (10.8%) at the top. Over a quarter of the portfolio is in the leading 10 names. Among them are Apple (NASDAQ:AAPL) Microsoft, Amazon and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL).

FXAIX is down around 12% this year. This low-cost fund could find a place in most long-term portfolios.

Fidelity Select Health Care Portfolio (FSPHX)

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52-Week Range: $23.14 – $35.73

Expense Ratio: 0.68%

Recent metrics suggests the U.S. healthcare spending comprises around a fifth of the gross domestic product, or GDP. The Fidelity Select Health Care Portfolio (MUTF:FSPHX) invests in some of the leading healthcare names. It was first launched July 1981.

FSPHX, which tracks the MSCI U.S. IMI Health Care 25-50 Index, currently has 122 holdings. With regards to sub-sector weightings, we see managed healthcare with 19.79%, biotechnology with 18.26%, life sciences tools & services with 18.24%, pharmaceuticals with 15.54% and healthcare equipment with 15.01%.

The top 10 stocks in the portfolio account for almost half of of $7.9 billion in net assets. UnitedHealth, Eli Lilly (NYSE:LLY), Danaher (NYSE:DHR), Boston Scientific (NYSE:BSX) and Humana (NYSE:HUM) are among the most prominent holdings on the roster.

PSPHX has lost over 12% since January. The recent decline makes PSPHX attractive for long-term investors wishing to have exposure to healthcare stocks.

Best Fidelity Funds for Retirees: Fidelity Select Utilities Portfolio (FSUTX)

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52-Week Range: $94.45-$114.35

Expense Ratio: 0.74%

The Fidelity Select Utilities Portfolio (MUTF:FSUTX), which invests in 31 stocks, focuses primarily on power and gas utilities. The fund was first listed in December 1981.

Among the names on the roster, we see electric utilities leading at 69.67%, followed by multi-utilities (19.8%), independent power producers & energy traders (7.08%) and renewable electricity (2.17%). The top 10 stocks account for close to two-thirds of its net assets of $1.3 billion. They include NextEra Energy (NYSE:NEE), Southern (NYSE:SO), Sempra Energy (NYSE:SRE), Exelon (NASDAQ:EXC) and Constellation Energy (NASDAQ:CEG).

FSUTX has gained 6% since the beginning of the year. Trailing P/E and P/B ratios stand at 25.7x and 2.1x, respectively. Retirees may want to do more research on a utility fund like FSUTX.

Fidelity Small-Mid Cap Opportunities ETF (FSMO)

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52-Week Range: $18.31-$25.24

Expense Ratio: 0.6%

Next up is an actively managed fund, namely the Fidelity Small-Mid Cap Opportunities ETF (BATS:FSMO). It uses quantitative models to form a basket of small- and mid-cap stocks. As it is a non-transparent ETF, it does not reveal its holdings daily. 

FSMO, which tracks the Russell 2500 Index, has over 200 stocks. The fund started trading in February 2021, and net assets stand close to $27 million. 

As of the end of Q2 on June 30, the top 10 stocks comprised over 12% of the FSMO. They included Molina Healthcare (NYSE:MOH); AutoZone (NYSE:AZO), Builders FirstSource (NYSE:BLDR) and Comerica (NYSE:CMA).

Recent analysis by Hartford Funds suggests “the best opportunities may be found in small- and mid-cap companies where growth and valuations are more attractive.” Therefore, FSMO deserves your attention.

Best Fidelity Funds for Retirees: Fidelity Value Fund (FDVLX)

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52-Week Range: $12.30-$16.29

Expense Ratio: 0.79%

The final fund is the Fidelity Value Fund (MUTF:FDVLX). It invests in securities that fund managers believe are undervalued. The fund started trading in December 1978.

FDVLX tracks the Russell Midcap Value Index and has 243 holdings. In terms of sectoral distribution, we see industrials with 19.61%, consumer discretionary with 13.69%, and financials with 12.76%.

The top 10 stocks in the portfolio represent about 10% of the $8.3 billion total net assets. Antero Resources (NYSE:AR), Edison (NYSE:EIX) and CubeSmart (NYSE:CUBE) are among the largest positions in the fund.

The fund is down around 7% YTD. This Fidelity mutual fund deserves further research.

On the date of publication, Tezcan Gecgil, Ph.D., is both long and short AMZN and META. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.

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