3 Fidelity Funds with 5 stars from Morningstar

Fidelity Investments is the nation’s fourth-largest mutual fund manager with more than $4.3 trillion in assets under management as of March 31, 2022, the most recent information available. Fidelity serves 40 million individual investors in more than 500 mutual funds and ETFs.

A fund’s quality can be approximated using Morningstar’s star ratings, which range from 1 star (the lowest quality) to 5 stars (the highest). Star ratings are graded on a curve. the top 10% of funds receive five stars, the next 22.5% receive four stars, the middle 35% receive three stars, the next 22.5% receive two stars, and the bottom 10% receive one star. Here’s a look at three of Fidelity’s 5-star Morningstar funds. All information is accurate as of Q2 2022.

Basic Takeaways

  • Fidelity Funds is one of the largest mutual fund families in the world, with more than $4.3 trillion in total client assets under management.
  • Fidelity had 40 million investors in 2022 invested in more than 500 mutual funds, several of which were rated 5 stars by fund tracker Morningstar.
  • Among the highlights are two mutual funds in the balance category, Fidelity Balanced and Fidelity Capital & Income.
  • Another 5-star fund investors should consider is the Fidelity Mid Cap Enhanced Index, which tracks the Russell Mid Cap Index.

Fidelity Balanced (FBALX)

Fidelity Balanced Fund (FBALX) invests in a mix of stocks, bonds and cash. Balanced funds are often a good choice for investors who either want to hold a smaller number of funds and therefore like the somewhat all-in-one approach that a balanced fund offers, or who want a fund that can represent a base in which they can build the rest of their portfolio.

Fidelity Balanced falls in the middle in terms of risk. It is riskier than a pure bond fund, but not as risky as a pure equity fund. It is considered a moderately-allocated fund, meaning it offers a medium-risk asset allocation that is about two-thirds equities and one-third bonds.

Since the fund’s inception in 1986, this $41 billion AUM 5-star fund has averaged a return of about 9.34% through the second quarter of 2022. The expense ratio for FBALX is 0.51% and has a relatively high turnover ratio 0.40, but there is no minimum initial investment amount.

Fidelity Capital & Income (FAGIX)

Fidelity Capital & Income Fund (FAGIX) is another 5-star balanced fund that leans much more toward bonds, with about 75% of the portfolio weighted to a bond allocation. The fund provides a good mix of growth and income. The market risk is higher than that of a pure bond fund but lower than that of a pure mutual fund. Long-term returns are higher than most bond funds.

The expense ratio for FAGIX is 0.67% with no minimum investment amount. The fund has returned an annual average rate of 9.41% through the second quarter of 2022.

Fidelity Blue Chip Growth (FBGRX)

A third Fidelity 5-star fund is Fidelity Blue Chip Growth fun (FBGRX), a good choice for investors looking to gain exposure to mature large-cap stocks. FBGRX invests at least 80% in large-cap blue-chip stocks and the remainder in large-cap growth opportunities. This gives it active management in something like the S&P 500 index.

The expense ratio for FBGRX is 0.79% with no minimum investment and a turnover ratio of 0.41. The fund has returned 12.2% annually, on average, since inception.

What does it mean to be a 5 star fund from Morningstar?

According to Morningstar, funds that qualify for a five-star rating are those whose risk-adjusted returns are in the top 10% of their category peers.

Are Fidelity Funds good for beginners

Yes. There are Fidelity funds that are good for beginners as well as those who are more financially savvy. Fidelity is known for offering low-cost investment options that may appeal to new investors, including low-cost index ETFs.

What is the largest Fidelity Mutual Fund?

In terms of assets under management (AUM), the Fidelity 500 Fund (FXAIX) is Fidelity’s largest. This S&P 500 index fund has $375 in assets and a very low expense ratio of 0.015%.

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