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15 Best Fidelity Funds for the Next Bull Market

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20.08.2020

The rise of low-cost index funds and ETFs over the last decade or two has revolutionized the way people invest. However, while a lot of folks are content to simply "buy the market" with indexed long-term holdings, investors still have their choice of numerous actively managed funds with a strong track record of outperformance.

In contrast to investment giant Vanguard, which made a name for itself with low-cost index funds, Fidelity's funds are known for their active management and tactical investments. And while not every one of Fidelity's active mutual funds always beat their benchmark, many of these investments continue to thrive and outperform, even if most attention remains on index funds and exchange-traded products.

Here, we look the 15 best Fidelity funds for investors looking to squeeze a bit more profit out of the next bull market. All have more than $1 billion in assets and zero investment minimums, meaning they are simple to trade in and out of as you require. While many have higher fees than their index fund alternatives, a little research shows that investors can sometimes tap into significantly better performance as a result.

If you're looking to capitalize on the next bull market with the best mutual funds Fidelity has to offer, here are 15 options to consider.

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Let's start with the asset manager's namesake Fidelity Fund (FFIDX, $55.84), which has an inception date of 1930 and is one of the oldest mutual funds out there. As has long been its mission, this diversified investment still focuses on large U.S. stocks.

"Our guiding philosophy is that stocks of high-quality companies that exhibit persistent growth and generate positive free cash flow," according to official FFIDX literature, which results in a portfolio that "can outperform the market over time."

With total returns of about 21% in the past 12 months vs. an 8%-plus gain for the S&P 500 Index, that pledge of outperformance seems to be true lately, too.

Fidelity Fund is one of the more focused large-cap equity offerings out there at only about 110 holdings. However, its selectivity seems to be most of the appeal. Just be aware that its admittedly small portfolio is actually even more concentrated than it seems; roughly 40% of assets are behind its top 10 positions that include mega-cap names such as Microsoft (MSFT) and Apple (AAPL).

Learn more about FFIDX at the Fidelity provider site.

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Founded in 1967 and run by the same manager (William Danoff) since 1990, Fidelity Contrafund (FCNTX, $15.53) is one of the most respected names in the mutual fund universe. It has a strong track record that has helped it maintain a huge volume of assets despite the general movement toward ETFs and index funds, and remains one of the biggest investment vehicles on the planet.

This diversified large-cap fund has a bias toward growth investments, but at its core it is an active and opportunistic investment vehicle that will go where it sees the most potential in the market.

"Philosophically, we believe stock prices follow companies' earnings," the fund's managers state in official literature. "As a result, our investment approach seeks firms we believe are poised for sustained, above-average earnings growth."

FCNTX also seeks out firms with a strong competitive position, high returns on capital, solid free cash flow and standout corporate management.

Contrafund is relatively lean, with about 280 total holdings. It's also naturally biased toward technology; about a third of assets are invested in the sector, as well as tech-adjacent stocks including Amazon.com (AMZN) and Facebook (FB). This large-cap tech focus has helped it outperform so far in 2020, racking up about 14% total returns vs. a small loss for the benchmark S&P 500 index in the same period.

Learn more about FCNTX at the Fidelity provider site.

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Fidelity Magellan Fund (FMAGX, $11.26) is another storied Fidelity fund known for its active management and long-term outperformance. Started in 1963, the fund has logged a terrific track record with gains across 44 of those 56 years – an impressive 79% win rate.

With an incredibly selective portfolio of under 90 stocks at present, this Fidelity mutual fund might at first seem less diversified as other offerings out there. But despite a hefty weighting of almost 32% in tech stocks, it's not that out of sync with other large-cap growth funds on Wall Street. And honestly, part of Magellan's outperformance comes from the fact that it has zero dollars in energy stocks right now.

"Our investment approach seeks to identify high-quality growth stocks benefiting from long-term 'mega trends,'" write the managers, "as well as the three 'B's' – brands, barriers to entry and 'best in class' management teams."

Right now, top holdings include familiar Big Tech names that regularly top the other best Fidelity funds on this list. FMAGX also holds large positions in digital payments giants Visa (V) and Mastercard (MA), as well as home-improvement retailer Home Depot (HD).

Learn more about FMAGX at the Fidelity provider site.

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