Best Fidelity Index Funds
Fidelity is among the best when it comes to offering Index Funds, which they have been offering for over 30 years, when you look at fees and returns. Fidelity has introduced zero expense ratio index funds and also offers zero minimum Fidelity Index Funds that require no minimum to open an account and zero account fees for retail accounts, all while offering 24/7 live customer support!
This article will showcase, over 10 years, a Fidelity Index Fund for the S&P, Dow, NASDAQ, and then a bonus coverage you will not want to miss! Before discussing each one, what is an Index Fund and why should you invest?
What is an Index Fund and why should you invest?
Investing in an index fund does not enlist a fund manager but rather buys a broad representation,
and sometimes all of the securities in an index (e.g., S&P 500). An index fund is a mutual fund that aims to match the risk and return of that index rather than out-perform it.
The reason Index Funds are popular with investors is because they generally have lower expenses,
referred to as Net Expense Ratio, than managed funds. They also offer broad diversification of
the investments which helps reduce risk and thus lowers turnover in the portfolio.
Below are four Fidelity Index Funds across the Dow, NASDAQ, and S&P 500 indexes, plus a bonus
coverage.
Best Fidelity NASDAQ Index Fund – FNCMX
FNCMX was designed in 2003 to provide investment returns that closely correspond to the performance
of the Nasdaq Composite Index by normally investing at least 80% of assets in common stocks
included in the index.
The Total Net Assets of FNCMX is $12 Billion with a Net Expense Ratio of 0.29%.
The top three stocks being held in FNCMX are Apple (AAPL at 11.06%), Microsoft (MSFT at 8.65%), and
Amazon (AMZN at 7.93%).
The 10-year return of the fund, before taxes, is 18.02% compared to 18.22% for the NASDAQ Composite.
The turnover for FNCMX is higher than many others at 17%
Best Fidelity S&P 500 Index Fund – FXAIX
FXAIX is an index fund that was created in 1988 to provide results that correspond to the performance
of the S&P 500 Index by normally investing at least 80% of assets in common stocks included in the
index.
The Total Net Assets of FXAIX is $328 Billion with a stellar Net Expense Ratio of only 0.02%.
The top three stocks being held is in FXAIX are Apple (AAPL at 6.71%), Microsoft (MSFT at 5.58%),
and Amazon (AMZN at 4.35%).
The 10-year return of the fund, before taxes, is 13.90% compared to 13.91% of the S&P 500. The
turnover for FXAIX is an amazing 4%!
Best Fidelity DOW Index Fund - FSKAX
FSKAX is an index fund that was created in 1997 to provide results that correspond to the performance
of the Dow Jones Index by normally investing at least 80% of assets in common stocks included in the
index.
The Total Net Assets of FSKAX is $66 Billion with a minuscule Net Expense ratio of only 0.02%.
The top three stocks being held is in FSKAX are Apple (AAPL at 5.47%), Microsoft (MSFT at 4.55%),
and Amazon (AMZN at 3.55%).
The 10-year return of FSKAX, before taxes, is 13.76% compared to 13.75% of the Dow Jones. The
turnover for FSKAX is 11%.
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Bonus Coverage – FSMAX
The bonus coverage is for the fund FSMAX. It was created in 1997 but is unique in that it seeks
to provide results to correspond to the performance of mid to small US companies by normally
investing at least 80% of assets in common stocks in the Dow Jones US Completion Total Stock
Market Index.
You will notice that the top three holdings, mentioned below, are not only
different companies than the other funds mentioned above, but their holding percentages are MUCH
smaller too which is due to the spreading out (owning) across many more stocks. The Total Net
Assets are $40 Billion with a higher Net Expense Ratio of 0.90.
The top three stocks being held
in FSMAX are Square Inc (SQ at 1.17%), Zoom Video (ZM at 1.07%), and Uber Technologies (UBER at
1.01%). The 10-year return of FSMAX, before taxes, is 13.14% compared to 13.01% of the Dow Jones
US Completion index. The turnover for FSMAX is 15%.
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Fidelity Index Funds Summary
Outside of the unique fund of FSMAX, you will notice that the other three (FNCMX, FXAIX, and
FSKAX) funds mentioned are all holding the same top three companies, however, their holding
percentages of the same three companies vary drastically from one fund to the next.
The reason
for this is because even though they were created to each mirror a different index, holding the
same powerful companies such as Apple (AAPL), Microsoft (MSFT), and Amazon (AMZN) allow them to
delegate the risk of the rest of that fund’s holdings across the index in which they are
mirroring. This is supposed to reduce the risk of the fund, thus providing you with safer,
market comparable, long term returns.
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