Which fidelity freedom fund

Danoff prefers to buy beaten-down or overlooked best-in-class companies with superior earnings growth, proven management teams and sustainable competitive advantages. These days, he's bullish on tech —well, he has been for years, but he is particularly keen on the space now as digital transformation stories continue apace. He has owned Amazon.

Watchers of Fidelity funds consider Contrafund a conservative choice for growth. There's some merit to that. Over the past five years, for instance, the fund's This is one of the best Fidelity funds for investors who want growth but not all the volatility that comes with a more aggressive fund.

It's hard to muster up excitement about investing overseas, because U. As foreign-stock funds go , Fidelity Diversified International , which invests mostly in large companies with durable or improving growth prospects, is a solid choice. He favors high-quality businesses with competitive advantages and consistent profitability. The fund's top country exposures include Japan, France and the U. But its investments aren't limited to developed countries.

In years past, we have rated Fidelity Diversified International a Hold because next to its peers — funds that invest in large, growing foreign stocks — it's decidedly mediocre. Fidelity Diversified International has lagged the typical foreign large growth fund in five of the past 10 years.

There are certainly better actively managed funds out there, but those funds might not be available to you in our plan. In this review, we have to consider that this might be the only active foreign fund available in the plan. In that context, this foreign-stock fund is a fine choice. Fidelity Growth Company is Fidelity's best large-company growth fund. Over the past decade, manager Steven Wymer has delivered a Only a dozen or so funds have done better than that over the past 10 years.

Many investors are shut out to Fidelity Growth Company now because it's closed to new investors. But if your k plan includes FDGRX as an investment option, you can still invest in it, even if you're new to the fund. Wymer holds close to stocks in the fund, with a heavy tilt toward information technology companies, such as Nvidia NVDA , Salesforce. Economically sensitive stocks have recently given back some of their leadership to secular growth stocks, Wymer says in a recent report.

That's why he's focused on companies with a strong outlook based on fundamentals. FDGRX is one of the best Fidelity funds on offer, generating significant wealth in the past over time.

If you're lucky enough to have access to it in your k plan, buy shares. Joel Tillinghast was a Fidelity analyst covering tobacco and personal-care-product firms when he came up with a concept for a new fund more than 30 years ago. The idea was to find good values in high-quality small companies and out-of-favor larger firms.

Fidelity higher-ups loved it. So in late , Fidelity Low-Priced Stock launched. Morningstar recently named Tillinghast its outstanding portfolio manager of Some things have changed over the years. Low-Priced Stock also owns more foreign stocks than it did in its earliest days. Finally, FLPSX was always focused on companies of all sizes, but early on, it tilted heavily toward small firms.

Now, the fund is evenly split among large-, midsize- and small-company stocks. But Tillinghast and his comanagers still look for companies with sturdy profits, little debt and a sustainable competitive edge over peers.

He's not "stingy," says Morningstar analyst Robby Greengold, and he doesn't "chase fads. FLPSX is one of the best Fidelity funds if you're looking for a great core holding — it's well diversified among sectors and globally.

And it boasts low volatility relative to most stock funds. The only concern would be whether Tillinghast, who is 63 years old, retires any time soon. But he shows no sign of slowing down. Manager Daniel Kelley took over this fund in mid , but he appears to be finding his way. That's why we're upgrading this fund from Hold to Buy. Since he assumed his position, the fund has returned Aggregate Bond index.

That beats the On the stock side, Kelley relies on fundamental and quantitative analysis to build the portfolio. He favors companies that offer earnings and revenue growth at a reasonable price. Lately, Kelley has loaded up on retail stocks that might benefit from pent-up demand from consumers as well as financials , which stand to gain from improved loan demand as the economy reopens. A rise in interest rates, if it happens, would be a bonus for banks, too. On the bond side, rising inflation and interest rates are a concern.

Bond prices and interest rates move in opposite directions. So Puritan is currently tilting toward investment-grade corporate bonds, especially those issued by financials, given the banks' strong balance sheets and attractive valuations. Fidelity Puritan is best for moderate investors who want an all-in-one portfolio solution for stocks and bonds. Under Kelley, who has run the fund for just over three years, Puritan has turned in above-average returns with below-average volatility.

This is the first time a Fidelity Freedom Index target-date fund has ranked among the most widely held k funds. This particular fund is designed for investors who plan to retire around the year ; that puts them in their mids today. As its name implies, it is comprised entirely of index funds six, to be exact. Along with a total market U. Aggregate bond index, a long-term Treasury fund and an inflation-protected bond index fund. It gets the job done, as index funds go.

Over the past 10 years, the fund's annualized return, 9. Because index funds make up its innards, much of Freedom Index 's success will hinge on how assets are allocated.

Many experts believe that regardless of the strategy, asset allocation — the practice of apportioning a certain slice of a portfolio to different assets to balance risk and reward — is more important to investing successfully than security selection. To that end, Fidelity announced in July that it would be tweaking the allocation of the Freedom Index funds, all of it to increase diversification benefits on the bond side. It's adding a slice of foreign government debt, beefing up the allocation to Treasury Inflation-Protected Securities short-term and long-term as well as long-term Treasuries.

To make room for these changes, the series will reduce assets in investment-grade bonds and short-term debt. Seven Fidelity Freedom Funds that sport the target years to rank among the most widely held k funds.

While not splashy, the Freedom series nonetheless deserve a spot among Fidelity's best funds. These funds perform well, ranking in the top quartile of their respective peer groups in most calendar years. Target date funds are mutual funds designed to simplify retirement investing. By purchasing a single fund, you get a diversified portfolio of domestic and international stocks and bonds.

Furthermore, target date funds adjust their asset allocation from mostly stocks to mostly bonds as the investor nears retirement. Not all target date funds are created equal, however. While some charge expense ratios of less than 20 basis points, others can cost more than basis points.

In addition, funds deploy varying investment strategies, particularly as investors get closer to their date of retirement. Fidelity offers two types of target date funds, based on either passively managed index funds or actively managed mutual funds.

The Fidelity Freedom Index target date fund uses low-cost index funds to implement its investment strategy—with an expense ratio of just 12 basis points, the fund is very affordable.

It owns four index funds to provide a diversified portfolio to investors:. The Vanguard Target Retirement Fund charges an expense ratio of just 15 basis points.

The allocation will continue to shift toward bonds for approximately seven years after the designated date. One of the least expensive funds in our list, the State Street Target Retirement Fund costs just 9 basis points.

Investors should note, however, that this fee could increase to 89 basis points by April 30, Similar to Vanguard funds, State Street target date funds shift their allocation toward bonds and away from stocks for a period of five years after reaching their target date.

According to State Street , they take this approach based on academic research that shows most Americans do not tap their retirement accounts until required minimum distributions RMDs begin. American Funds have the dubious honor of offering the most expensive target date fund on our list: The American Funds Target Date Retirement Fund charges an expense ratio of 78 basis points. The fund nevertheless made our list because of its five-year performance record and risk-weighted asset allocation.

Its fixed income allocation accounts for just 2. The current portfolio includes the following funds:. The allocation to equities declines after the target retirement date passes. The fund costs 75 basis points, which is more than we would normally recommend. The fund, however, has a 5-year performance of The Fidelity Freedom Fund utilizes a similar glide path with the index version of the funds.

As one moves through retirement, however, the equity allocation will continue to decline. The T. While the cost of this target date fund is on the high side at 71 basis points, its five-year performance comes in at Of the funds that made our list, T. Rowe Price takes the most aggressive approach at retirement. We considered several factors to identify the best target date funds , including fees, performance, asset allocation and glide path. The lower the fees, the more likely the fund will outperform its more expensive counterparts.

Most of the funds in our list have expense ratios below 50 basis points, and the most expensive is 80 basis points. There are target date funds, however, that cost more than basis points. We believe that the performance of these funds do not justify the cost. While target date funds have been around since the s, performance data is limited.

Because mutual fund companies have made changes to their target date funds, performance data are limited to 5-year returns. Our list will likely change as year returns become available over the next several years. The asset allocation of a target date retirement fund changes over time. In funds, equities are heavily weighted as investors have 40 years until retirement.

For the funds we examined, the range of equity allocations was more varied. As the allocation falls below this level, the longevity of the portfolio decreases. In other words, the odds of a retiree running out of money during retirement goes up. Glide path describes how the asset allocation of a target date fund changes over time. For some, the changes in asset allocation stop after about five to seven years. For others, the changes continue for decades.

As such, those using target date funds should carefully consider whether these funds best meet their needs in retirement. Financial services firms manage families of target date funds, with individual versions for each year, past and future. Investors choose a fund that targets their anticipated year of retirement, and they may continue holding it until long after the target year has passed.

For some funds, the asset allocation changes end about five to seven years after the target date.