Financial advisors generally discourage investors from choosing mutual funds based solely on past performance. This goes beyond the common warning that past results do not predict future returns.
It also reflects concerns about recency bias, where investors chase mutual funds that have recently done well without understanding the risks involved. Performance figures on their own can be misleading because they do not show how much volatility or downside risk a fund took to achieve those returns.
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A fund’s annualized total return, typically shown over one-, three-, five- or 10-year periods, does not capture the path taken to get there. Two funds may post similar long-term returns, but one could have experienced far larger swings along the way.
For example, a sector fund focused on semiconductors may deliver strong long-term gains but also go through sharp drawdowns. If those swings exceed an investor’s tolerance, they may panic sell at the wrong time, undermining the benefit of those returns.
To address this, investors and fund managers often look at risk-adjusted metrics. Standard deviation measures how much a fund’s returns have varied over time, while the Sharpe ratio evaluates how much excess return a fund generated per unit of risk. These tools provide more context, but they can still be difficult to interpret without experience.
That is where third-party systems like the Morningstar star rating come in. This methodology compares a fund’s risk-adjusted performance to peers in its category over three-, five- and 10-year periods.
Funds are rated from one to five stars, with five-star funds representing the top 10% of their peer group. Ratings are updated monthly and require at least three years of performance data, with some funds also receiving an overall rating based on a weighted average of available periods.
Many fund providers highlight these ratings as a quick reference for investors. Fidelity Investments, for example, offers screening tools that allow investors to filter funds based on Morningstar ratings, which can then be ordered based on other important metrics like expense ratios.
Here are seven of the best Fidelity mutual funds to buy and hold, all of which currently carry an overall five-star Morningstar rating:
| Fund | Expense Ratio |
| Fidelity Multi-Asset Index Fund (ticker: FFNOX) | 0.11% |
| Fidelity Balanced Fund (FBALX) | 0.46% |
| Fidelity Puritan Fund (FPURX) | 0.47% |
| Fidelity Freedom 2040 Fund (FFFFX) | 0.66% |
| Fidelity Mega Cap Stock Fund (FGRTX) | 0.58% |
| Fidelity Blue Chip Growth Fund (FBGRX) | 0.61% |
| Fidelity Growth Discovery Fund (FDSVX) | 0.62% |
Fidelity Multi-Asset Index Fund (FFNOX)
“While it truly depends on each individual investor’s specific goals and objectives, I typically advocate for index funds in the accumulation phase, as these give great broad-market exposure with lower fees than actively managed funds,” says Wes Moss, managing partner and chief investment strategist at Capital Investment Advisors. FFNOX is a highly diversified index fund that can serve as a core holding.
FFNOX allocates across U.S. and international stocks and bonds. The portfolio is currently tilted toward equities, with only 15% allocated to bonds. All of the underlying holdings are index-based funds, helping keep costs low with a 0.11% expense ratio. Like most Fidelity funds, it has no minimum investment or transaction fees. FFNOX has delivered a 10.4% annualized return over the past 10 years.
Fidelity Balanced Fund (FBALX)
Some investors may find FFNOX’s allocation too aggressive, especially those nearing retirement. In that stage, preserving capital and generating income often take priority over capital appreciation. A more conservative alternative is FBALX, which allocates about 37% of its portfolio to bonds. This higher fixed-income exposure can help reduce volatility while also providing income, with a 1.8% 30-day SEC yield.
On the equity side, FBALX is tilted toward U.S. stocks, which make up about 59% of the portfolio, while international equities account for just 4%. Its bond holdings are primarily in U.S. Treasurys, along with some exposure to mortgage-backed securities and investment-grade corporate bonds. The fund charges a 0.46% expense ratio and has delivered a 10.9% annualized return over the past 10 years.
Fidelity Puritan Fund (FPURX)
FPURX follows a classic balanced approach of about 60% in equities and 40% in bonds. On the equity side, the fund focuses on growth-oriented companies that management believes are incorrectly priced relative to their long-term potential. For fixed income, it emphasizes investment-grade bonds while also adjusting exposure across sectors and yield curves, with a modest allocation to high-yield bonds for added return.
FPURX has flexibility to tilt that mix based on valuations and market conditions. That active approach has translated into strong results. Over the past 10 years, FPURX has delivered a 10.6% annualized return, outperforming the Morningstar “moderate allocation” peer category average of 8.1%. The fund has a long track record dating back to 1947 and remains reasonably priced, with a 0.47% expense ratio.
Fidelity Freedom 2040 Fund (FFFFX)
The previous Fidelity funds all use a set asset allocation between stocks and bonds, with some rebalancing periodically and others allowing managers to adjust the mix based on market conditions. Another approach is a target-date fund, which automatically shifts its allocation over time. A good example is FFFFX, designed for investors planning to retire around 2040.
As of 2026, the fund holds about 19% in bonds, which aligns with a longer time horizon of roughly 14 years to retirement. As the 2040 target date approaches, FFFFX will gradually reduce its equity exposure and increase its allocation to bonds. The goal is to move from growth toward capital preservation without requiring investors to actively manage the transition themselves.
[8 Top-Performing Fidelity Funds for Retirement]
Fidelity Mega Cap Stock Fund (FGRTX)
Investors with a higher risk tolerance who want to prioritize capital appreciation may find balanced allocation funds too conservative. FGRTX offers an equity-focused approach by investing in mega-cap companies found in benchmarks like the Russell Top 200 Index or the S&P 100. The fund is style-agnostic between growth and value, falling into the large-blend style box category.
FGRTX’s sector weights differ meaningfully from the S&P 500. Technology accounts for 26.4% of the fund versus 32.9% in the index, while it places greater emphasis on energy, with a 10.6% allocation compared to 4% in the S&P 500. Over the past 10 years, FGRTX has delivered a 15.5% annualized return, outperforming both the S&P 500 index and the Morningstar “large-blend” peer category.
Fidelity Blue Chip Growth Fund (FBGRX)
Investors who want to keep a large-cap focus but lean more toward growth may prefer FBGRX. The fund targets “well-known, well-established and well-capitalized” companies, often referred to as blue chips, under manager Sonu Kalra, who has led the fund since 2009. Over the past 10 years, FBGRX has delivered a 19.2% annualized return, outperforming the Russell 1000 Growth Index, at 16.8%.
FBGRX’s portfolio is more concentrated than a typical S&P 500 index fund. The top 10 holdings make up 61.1% of assets, and the fund carries a significant tilt toward technology, at about 49% of the portfolio. FBGRX charges a 0.61% expense ratio. Investors can also access this strategy in ETF format via the Fidelity Blue Chip Growth ETF (FBCG) at a lower 0.57% expense ratio.
Fidelity Growth Discovery Fund (FDSVX)
FBGRX is not the only strong-performing Fidelity growth fund. FDSVX offers a similar large-cap growth bias but with less emphasis on traditional blue-chip names. The fund focuses on companies with above-average earnings growth, positive earnings revisions, strong profit margins and durable long-term earnings power. It charges a 0.62% expense ratio, making it marginally pricier than FBGRX.
Over the past 10 years, FDSVX has delivered a 17.1% annualized return, outperforming its benchmark, the Russell 3000 Growth Index, which returned 16.4%. The portfolio is still relatively concentrated, with the top 10 holdings accounting for 54.2% of assets and a 43.7% allocation to the technology sector. Notably, semiconductor stocks play a key role, with Nvidia Corp. (NVDA) as the top holding, at 13.5%.
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The 7 Best Fidelity Mutual Funds to Buy and Hold originally appeared on usnews.com
Update 04/29/26: This story was previously published at an earlier date and has been updated with new information.