9 Best Fidelity Index Funds for Retirement

The aim of an index fund is to track the returns of a stock market index such as the S&P 500 or Wilshire 5000. Index funds can come in different forms, including mutual funds and ETFs. An index fund might buy all of the securities that comprise an index, or just a representative sample.

Some investors pick a few stocks and hope for a couple of big winners, but the index fund investor buys and holds a wide range of securities, hoping to ride the wave of long-term market growth. This makes index funds more stable and better suited for retirement investments. Just keep in mind that as with any investment, the money you put into an index fund is always at risk of losing value.

What Are Fidelity Index Funds?

Fidelity index funds provide investors with a simple, low-cost method of diversifying their portfolios across several sectors of the market.

This review of Fidelity index funds and ETFs focuses on equity funds. Fidelity ETFs don’t have as much performance history since they are relative newcomers to the investing world.

If you wonder about the performance of a Fidelity index funds account, a good starting place is to compare it to the performance of the index it tracks.

Index funds make sense for the average investor looking toward retirement. As famed stock picker Warren Buffett says, an index fund is a good way to avoid the risk of picking individual stocks and the effects of fees and expenses on your investments.

Best Fidelity Index Funds for Retirement

So what are the best Fidelity index funds? This evaluation of the top Fidelity index funds to buy looks at several measures of performance to answer that question. You’ll find the following information associated with each fund:

• Average annual returns

• Expense ratio

• Level of risk

• Fund overview

Here’s a look at some of the top performers:

1. Fidelity OTC Portfolio (FOCPX)

The objective of this fund is capital appreciation. Fund managers invest at least 80% of the assets in the common stocks of small- to medium-sized companies that trade on Nasdaq or over-the-counter markets. Typically, it invests more than 25% in the technology sector. Some of the top stocks held by the fund include Microsoft, Apple, Amazon, Facebook (Meta) and Google parent Alphabet.

• Average annual returns

  • -14.85% year-to-date

  • 25.04% one year

  • 36.71% three years

• Expense ratio: 0.8%

• Above-average risk

2. Fidelity Multi-Asset Index Fund (FFNOX)

Previously called the Fidelity Four-in-One Index Fund, the Multi-Asset Index Fund invests in seven Fidelity stock and bond index funds, allocating assets to achieve broad diversification.

• Average annual returns

  • -6.84% year-to-date

  • 17.05% one year

  • 19.41% three years

• Expense ratio: 0.14%

• Average risk

3. Fidelity Nasdaq Composite Index (FNCMX)

This fund is designed to closely track the price and yield of the Nasdaq Composite Index. Fidelity normally invests at least 80% of the assets into common stocks included in the Nasdaq. Top holdings include Apple, Microsoft, Amazon, Tesla, Alphabet and Facebook (Meta).

• Average annual returns

  • -13.42% year-to-date

  • 22.22% one year

  • 34.15% three years

• Expense ratio: 0.35%

• Above-average risk

4. Fidelity Large Cap Growth Index Fund (FSPGX)

This fund invests at least 80% of its assets into securities included in the Russell 1000 Growth Index, with a focus on large-cap growth stocks. Major holdings include Apple, Microsoft, Amazon, Facebook (Meta), Tesla and Alphabet.

• Average annual returns

  • -13.50% year-to-date

  • 27.58% one year

  • 34.04% three years

• Expense ratio: 0.035%

• Above-average risk

5. Fidelity 500 Index Fund (FXAIX)

This fund looks for results that correspond to the total return of U.S. common stocks. At least 80% of assets are invested in stocks included in the S&P 500 Index. A few of the fund’s top holdings are Microsoft, Apple, Amazon, Facebook (Meta), Alphabet and Berkshire Hathaway.

• Average annual returns

  • -8.67% year-to-date

  • 28.69% one year

  • 26.06% three years

• Expense ratio: 0.015%

• Above-average risk

6. Fidelity Total Market Index Fund (FSKAX)

Managers of this fund aim for investment returns that track the total return of a broad range of domestic equities. With that in mind, they put 80% of the fund’s assets into securities included in the Dow Jones U.S. Total Market Index. Major holdings include Microsoft, Apple, Amazon, Facebook (Meta), Tesla and Alphabet.

• Average annual returns

  • -9.56% year-to-date

  • 25.65% one year

  • 25.72% three years

• Expense ratio: 0.015%

• Above-average risk

7. Fidelity Inflation-Protected Bond Index Fund (FIPDX)

Investors with their eyes on retirement often want a Fidelity index funds bond option because of its safety. However, with that safety comes low returns that could be outpaced by inflation. Fidelity’s Inflation-Protected Bond Index Fund invests at least 80% of assets in inflation-protected debt securities included in the Bloomberg Barclays U.S. Treasury Inflation-Protected Securities Index.

• Average annual returns

  • -2.96% year-to-date

  • 5.93% one year

  • 8.36% three years

• Expense ratio: 0.05%

• Below average risk

8. Fidelity Intermediate Treasury Bond Index Fund (FUAMX)

The Fidelity Intermediate Treasury Bond Index Fund typically invests at least 80% of assets in securities included in the Bloomberg Barclays 5-10 Year U.S. Treasury Bond Index.

• Average annual returns

  • -2.42% year-to-date

  • -3.00% one year

  • 4.31% three years

• Expense ratio: 0.03%

• Below average risk

9. Fidelity US Sustainability Index Fund (FITLX)

This fund tracks the MSCI USA ESG Index, which MCSI says targets companies with positive environmental, social and governance performance that also share risk and return characteristics with companies in the fund.

• Average annual returns

  • -9.25% year-to-date

  • 31.57% one year

  • 27.11% three years

• Expense ratio: 0.11%

• Average risk

Why Invest In Fidelity Index Funds?

Fidelity index funds feature comparatively low costs well suited to buy-and-hold investors. Fidelity combines low expenses and good growth potential with index funds heavily tilted toward technology and consumer discretionary stocks.

Investors looking for index funds that follow U.S. stock indexes of all market cap sizes, international equity markets, emerging markets and even bonds should consider Fidelity. You get a wide range of choices — including sustainable index funds — allowing you to construct an asset-allocated portfolio just right for your needs and investment timeline. Some Fidelity index funds even pay dividends.

Daria Uhlig contributed to the reporting for this article.

Data is accurate as of Jan. 27, 2022, and subject to change.

This article originally appeared on GOBankingRates.com: 9 Best Fidelity Index Funds for Retirement