Fidelity has a handful of longstanding actively managed mutual funds that have created immense wealth for buy-and-hold investors who stayed…
Fidelity has a handful of longstanding actively managed mutual funds that have created immense wealth for buy-and-hold investors who stayed the course.
Names like the Fidelity Blue Chip Growth Fund (ticker: FBGRX) and the Fidelity Contrafund (FCNTX) have consistently outperformed their benchmarks over time, building a loyal investor base and strong track records. Even today, they rank among the best active stock funds available.
That said, it’s important to recognize the role of hindsight bias — the tendency to look back and assume that today’s winners were obvious choices all along. There’s also survivorship bias, where funds that failed or underperformed are forgotten, leaving only the standouts in the spotlight.
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For every Contrafund or Blue Chip Growth, there are others that strayed from their strategy or faded into underperformance. A prime example is the Fidelity Magellan Fund (FMAGX).
Once managed by legendary investor Peter Lynch, Magellan delivered a stunning 29.2% annualized return during his 13-year tenure — crushing the market and attracting huge inflows from retail investors. But after Lynch stepped down, Magellan struggled.
Magellan’s subsequent managers failed to replicate his success, with some even accused of closet indexing — a situation where an actively managed fund’s holdings closely mimic a passive benchmark while still charging high fees.
This often results in benchmark-like performance minus the added cost, almost guaranteeing long-term underperformance. Today, Magellan still exists, but it’s no longer the iconic namesake it once was.
Fortunately, Fidelity offers a wide range of other mutual funds that long-term investors can use to build wealth more efficiently. Many come with no sales loads, no trading commissions on Fidelity’s brokerage platform, and low expense ratios, making them attractive options for core portfolio holdings.
Here are seven of the best Fidelity mutual funds to buy and hold:
| Mutual Fund | Expense ratio | Forward Dividend Yield* |
| Fidelity 500 Index Fund (FXAIX) | 0.015% | 1.2% |
| Fidelity Total Market Index Fund (FSKAX) | 0.015% | 1.2% |
| Fidelity ZERO Large Cap Index Fund (FNILX) | 0.00% | 1.1% |
| Fidelity ZERO Extended Market Index Fund (FZIPX) | 0.00% | 1.2% |
| Fidelity ZERO Total Market Index Fund (FZROX) | 0.00% | 1.2% |
| Fidelity Zero International Index Fund (FZILX) | 0.00% | 2.8% |
| Fidelity Real Estate Index Fund (FSRNX) | 0.07% | 2.7% |
*As of April 2 close.
Fidelity 500 Index Fund (FXAIX)
“Savvy investors understand the importance of keeping your costs low and your options open, and Fidelity funds have become popular because they offer just that,” says Andrew Latham, a certified financial planner and director of content at SuperMoney.com. “With no sales loads, low fees and no minimum investment requirements, it’s easier to start investing without breaking the bank.”
FXAIX embodies all those attributes. For a very low 0.015% expense ratio, investors can start investing in the S&P 500 with as little as $1. The 500 large and mid-cap equities represented by FXAIX have historically delivered a strong 13% annualized returns over the trailing 10-year period. Tax-efficiency is also superb thanks to a low 3% turnover rate, which minimizes capital gains distributions.
Fidelity Total Market Index Fund (FSKAX)
“While it truly depends on each individual investor’s specific goals and objectives, I typically advocate for index funds in the accumulation phase, as these give great broad-market exposure with lower fees than actively managed funds,” says Wes Moss, managing partner and chief investment strategist at Capital Investment Advisors. For a more diversified alternative to FXAIX, consider FSKAX.
This fund tracks the Dow Jones U.S. Total Stock Market Index, which unlike the S&P 500 holds roughly 3,000 more mid- and small-cap stocks. However, the top holdings for both benchmarks remain very similar because they both use a market-cap-weighted methodology. FSKAX charges the same low 0.015% expense ratio and is also highly tax-efficient with a 3% annual portfolio turnover rate.
Fidelity ZERO Large Cap Index Fund (FNILX)
“Fidelity introduced zero-expense-ratio index mutual funds and also offered zero-minimum-investment mutual funds, no minimums to open an account and no-account fees for retail brokerage accounts,” Moss says. By choosing the right combination of Fidelity funds, smart investors can potentially build a complete portfolio virtually free of charge. To start, consider FNILX, an alternative to FXAIX.
This fund tracks the proprietary Fidelity U.S. Large Cap Index, which targets the 500 largest U.S. equities. It is slightly more passive than the S&P 500, as the latter also includes a committee review process and an earnings screen. However, the overall holdings and performance for FNILX are very similar to FXAIX. This fund has a true 0% expense ratio and maintains a tax-efficient 3% annual turnover rate.
Fidelity ZERO Extended Market Index Fund (FZIPX)
FNILX and FXAIX use a market-cap-weighted approach, meaning the largest companies get the biggest allocations. If you want more exposure to mid- and small-cap stocks, consider FZIPX, which tracks the Fidelity U.S. Extended Investable Market Index — excluding the largest 500 U.S. stocks and targeting the next 2,500 by size. This makes it a great complement for FNILX or FXAIX.
Like many Fidelity index funds, FZIPX doesn’t fully replicate its index. While the benchmark includes around 2,500 stocks, FZIPX holds just over 2,000. That’s because it uses a technique called sampling, where the fund selects a representative mix of securities instead of owning every stock in the index. This helps reduce trading costs and complexity while still closely tracking the index’s performance.
Fidelity ZERO Total Market Index Fund (FZROX)
If you don’t want to slice and dice your large-cap versus mid- and small-cap exposure, you can keep things simple with FZROX, which tracks the Fidelity U.S. Total Investable Market Index — a broad benchmark of more than 2,500 stocks. While it includes companies of all sizes, it’s market-cap weighted, meaning large-cap stocks dominate the allocation.
FZROX and other Fidelity ZERO funds eliminate expenses using a two-part strategy. First, they track in-house indexes, which avoids paying licensing fees to third-party providers. Second, they engage in securities lending, where the fund temporarily loans out shares to other financial institutions in exchange for fees — generating income that helps offset operating costs.
Fidelity Zero International Index Fund (FZILX)
“International investing can be a great diversifier for investors who are too heavily concentrated in U.S. stocks,” says Henry Yoshida, CEO and co-founder of Rocket Dollar. “With FZILX, you can invest internationally at zero cost — this is a win-win for any serious long-term investor.” Investing in individual international equities can incur currency conversion costs or American depositary receipt (ADR) fees.
In contrast, FZILX is free to own, with a 0% expense ratio. It tracks the Fidelity Global ex U.S. Index, a market-cap-weighted benchmark of more than 2,200 stocks, and unlike some international funds, it includes both developed and emerging markets. The former includes countries like Japan, the United Kingdom and Canada, while the latter spans countries such as China, India and Brazil.
Fidelity Real Estate Index Fund (FSRNX)
Owning physical real estate isn’t as simple or as glamorous as social media influencers might suggest — it comes with mortgage risks, tenant issues, property taxes, maintenance costs, insurance hassles, and often a lack of diversification since you’re usually tied to one niche like residential or commercial property. A more convenient alternative is FSRNX, which offers exposure to real estate stocks.
FSRNX tracks more than 150 real estate investment trusts (REITs) via the MSCI US IMI Real Estate 25/25 Index. The fund spans multiple real estate subsectors, including residential, office, warehouse, self-storage, cell towers, data centers, retail and health care. It can also be held in a tax-sheltered account like a Roth IRA to keep the distributions tax-free, and it charges a low 0.07% expense ratio.
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The 7 Best Fidelity Mutual Funds to Buy and Hold originally appeared on usnews.com
Update 04/03/25: This story was previously published at an earlier date and has been updated with new information.
