FIDELITY IS ALL ABOUT STOCK picking. It stems from the company’s early days, when firm founder Ned Johnson told his fund managers, “Here’s your rope. Go ahead and hang yourself with it.” That philosophy gave Fidelity’s portfolio managers and analysts the freedom to choose good stocks, whatever their approach. The firm is home to some of the industry’s best stock pickers, past or present, including retired Magellan Fund helmsman Peter Lynch and Contrafund manager Will Danoff. As a result, Fidelity’s funds are among the most popular investments for retirement savings.
In this article, the second of a four-part series, we analyze the most popular actively managed Fidelity funds (measured by assets held) in workplace plans. (For our review of Vanguard funds, see “Best 401(k) Funds From Vanguard,” Jan.) The list of funds comes courtesy of BrightScope, a financial data firm that rates 401(k) plans. Eighteen Fidelity funds rank among the top 100. Of those, four are index funds, which we don’t weigh in on here. But the remaining 14—seven of which are Fidelity Freedom target date funds, which we rate as a single entry—are actively managed. We review those and rate them “buy,” “sell” or “hold.” Share classes listed are the most accessible for individual investors, but your 401(k) plan may offer a class of shares that charges lower fees. Returns are through December 4.
FIDELITY BALANCED (SYMBOL FBALX, EXPENSE RATIO 0.52%) BUY Relative to its peers (balanced funds, which hold roughly 60% of assets in stocks and 40% in bonds), Fidelity Balanced is an excellent choice. Over the past five and 10 years, the fund has outpaced 95% or more of its competition on an annualized-return basis. Balanced usually holds more of its assets in stocks—67% at last report—than its typical peer. That’s helped performance lately, but it has also resulted in above-average volatility. Lead manager Robert Stansky makes the big-picture calls of how much to put in stocks and bonds. Eight stock pickers and four bond pickers choose the securities.
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