The 10 Best Fidelity Funds for 2017

These Fidelity funds combine for a diverse portfolio to face the challenges of the market in 2017

Fidelity Investments

Source: Grk1011 via Wikipedia (Modified)

The best Fidelity funds for 2017 cover a diverse blend of mutual fund types that will be crucial for navigating what is sure to be a challenging year for investors.

As the market and economy enter the late phase of the business cycle, rising interest rates and high relative valuations for stocks will mean that investors will need to be cautious by tapping down on the riskier fund types and by spreading market risk across diverse categories.

With that said, 2017 is not a time to be exceedingly cautious because investor sentiment is positive and the fourth-quarter 2016 Donald Trump rally can continue well into the New Year, as long as expected economic conditions remain in place to support higher equity prices.

In summary, investors can remain optimistic in 2017 but are wise to exercise caution by avoiding unnecessary risk and by implementing smart diversification tactics.

Fortunately the best Fidelity funds — like these — can meet the challenges faced by investors in 2017.

Best Fidelity Funds for 2017: Fidelity Mid-Cap Stock Fund (FMCSX)

Expenses: 0.73%, or $73 annually for every $10,000 invested
Minimum Initial Investment: $2,500

A rising dollar tends to give a haircut to earnings on mega-cap companies that typically have operations overseas. This makes top mid-cap funds like the Fidelity Mid-Cap Stock Fund (MUTF:FMCSX) smart alternatives to large-cap stocks in 2017.

The FMCSX portfolio has a growth objective, which can help juice returns in the late phase of the business cycle when growth stocks tend to outperform value stocks. Investors also get an experienced fund manager, John D. Roth, who has been at the helm of FMCSX for more than five years, during which he’s outperformed average mid-cap growth funds.

Instead of the typical large-cap multinational stocks found in S&P 500 index funds, the FMCSX portfolio focuses on mid-sized companies like Williams Companies Inc (NYSE:WMB), Boston Scientific Corporation (NYSE:BSX) and Williams Partners LP (NYSE:WPZ).

Best Fidelity Funds for 2017: Fidelity New Millennium Fund (FMILX)

Expenses: 0.74%
Minimum Initial Investment: $2,500

Investors wanting to hold large-cap stocks that can capture the momentum of growth stocks in 2017, will like what they see in Fidelity New Millennium Fund (MUTF:FMILX).

Pure large-cap stock funds, such as those that passively track the S&P 500 index, could lose to actively managed funds like FMILX in 2017. While it holds large-caps like Cisco Systems, Inc. (NASDAQ:CSCO), Facebook Inc (NASDAQ:FB) and Verizon Communications Inc. (NYSE:VZ), it can also invest in mid-caps and small-caps that won’t be negatively impacted by a strong dollar, which can hold back earnings of large companies operating overseas.

The investment strategy of FMILX is also unique in that management and the supporting analyst team watches trends in technology, economics, demographics and other factors that can be short-term opportunities, as well as developing long-term holdings.

Best Fidelity Funds for 2017: Fidelity Worldwide Fund (FWWFX)

Expenses: 0.96%
Minimum Initial Investment: $2,500

If you want to diversify into international stocks in 2017 and keep market risk reasonable, a world stock fund like Fidelity Worldwide Fund (MUTF:FWWFX) can do the job by spreading risk around the globe, including the U.S.

The investment strategy for FWWFX can take it anywhere in the world, which can be an advantage in 2017, when diversification and active management will likely be key advantages. Therefore shareholders of FWWFX can expect to get exposure to a blend of U.S. stocks like Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL), S&P Global Inc (NYSE:SPGI) and Adobe Systems Incorporated (NASDAQ:ADBE), along with foreign companies.

The global allocation is approximately 55% domestic equities and the remainder in non-U.S. stocks.

Best Fidelity Funds for 2017: Fidelity Select Energy Portfolio (FSENX)

Expenses: 0.8%
Minimum Initial Investment: $2,500

The economy is entering into the late phase of the business cycle during 2017, which means sectors tied to raw materials will be expected to outperform.

Plus, OPEC’s historic announcement in late 2016 that the big oil-producing countries will cut oil production will lend more support to prices for energy stocks. This makes Fidelity Select Energy Portfolio (MUTF:FSENX) one of the best Fidelity funds for 2017.

Energy prices have seen a remarkable turnaround in 2016 and look to continue their momentum into 2017. The combination of a resilient U.S. economy and moderating oil production will be positive for FSENX top holdings such as EOG Resources Inc (NYSE:EOG), Schlumburger Limited (NYSE:SLB) and Exxon Mobil Corporation (NYSE:XOM).

Best Fidelity Funds for 2017: Fidelity Select Health Care Portfolio (FSPHX)

Expenses: 0.73%
Minimum Initial Investment: $2,500

Health stocks took a big hit in 2016 but the health sector has historically been a leader in the late phase of the business cycle. This combination of factors makes Fidelity Select Health Care Portfolio (MUTF:FSPHX) one of the best Fidelity funds to buy in 2017.

The backdrop of depressed prices, improved prospects for a brighter 2017 and the defensive nature of healthcare, should downside pressure return during the year, makes FSPHX a smart sector play for the coming year and beyond.

Not only is the health sector a smart play for 2017 but FSPHX has consistently beaten the average returns for healthcare funds for one-, three-, five- and 10-year returns.

The FSPHX portfolio includes at least 80% health care stocks like top holdings Amgen, Inc. (NASDAQ:AMGN), Boston Scientific Corporation (NYSE:BSX), and Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA).

Best Fidelity Funds for 2017: Fidelity Select Consumer Staples (FDFAX)

Expenses: 0.77%
Minimum Initial Investment: $2,500

If you want broad exposure to defensive stocks in the consumer staples sector, the best funds to buy are mutual funds like Fidelity Select Consumer Staples Portfolio (MUTF:FDFAX).

The beauty of consumer staples stocks is that investors can have their cake and eat it too, so to speak, by participating in the upside of a growing economy while minimizing the downside when recession hits. This is because consumers still need to buy necessities, such as household goods and services, as well as health products and service. Consumers will also continue buying tobacco and alcohol when times get tough.

So this combination of staples and sin will provide exposure to stocks like FDFAX top holdings Proctor & Gamble Co (NYSE:PG), British American Tobacco PLC (ADR) (NYSEMKT:BTI) and CVS Health Corp (NYSE:CVS).

Best Fidelity Funds for 2017: Fidelity Balanced (FBALX)

Expenses: 0.55%
Minimum Initial Investment: $2,500

Investors looking for an all-in-one fund or a diversified core holding in 2017 are smart to consider one of the best balanced funds to buy, Fidelity Balanced (MUTF:FBALX).

Due to rising rates, bond prices will be under pressure for most of 2017. So investors wanting a balanced fund will be smart to hold funds like FBALX, which maintains an asset allocation of approximately 65% stocks and 35% bonds. The stock holdings primarily consist of large-cap names like Apple Inc. (NASDAQ:AAPL), Alphabet and, Inc. (NASDAQ:AMZN).

Bond holdings include Treasuries and corporates, most of which are investment grade or higher.

Best Fidelity Funds for 2017: Fidelity Limited Term Bond (FJRLX)

Expenses: 0.45%
Minimum Initial Investment: $2,500

Investors looking for a bond fund that has low sensitivity to interest rates in 2017 are smart to hold one of the best short-term bond funds, like Fidelity Limited Term Bond Fund (MUTF:FJRLX).

When interest rates are rising, as they are expected to be in 2017, bonds with longer maturities see the biggest declines in price. Although short-term bonds generally have lower relative yields compared to longer maturity issues, investors looking to diversify fixed income holdings in 2017 are smart to consider funds like FJRLX.

Short-term bond funds can also be good alternatives to money market funds for short-term liquidity needs. However investors still need to be aware that short-term bond funds can still decline in price in a rising interest rate environment.

Best Fidelity Funds for 2017: Fidelity Inflation Protected Bond (FINPX)

Expenses: 0.45%
Minimum Initial Investment: $2,500

If you’re looking for the best bond funds for rising interest rates, you’ll want to consider funds like Fidelity Inflation-Protected Bond Fund (MUTF:FINPX).

The primary reason the Federal Reserve raises rates is to fight inflation. And now that inflation is becoming more and more of a threat to the economy Treasury inflation-protected securities, known as TIPS, can hold up better than the broader bond market. This potentially makes 2017 ripe for bond funds that invest in TIPS.

Even if inflation remains modest, as is the widely held expectation, a quality TIPS fund like FINPX makes for a smart diversification tool for a diversified portfolio.

Best Fidelity Funds for 2017: Fidelity Floating Rate High Income (FFRHX)

Expenses: 0.7%
Minimum Initial Investment: $2,500

If you’re looking for a bond fund that can perform better than the aggregate bond market in 2017, Fidelity Floating Rate High Income (MUTF:FFRHX) is a smart choice.

Also called bank loans, floating-rate notes or “floaters,” floating-rate bonds adjust on a regular basis and the respective interest rate is tied to a benchmark, such as the U.S. Treasury bill rate, the LIBOR or the prime rate.

This means that, unlike conventional bonds, floating-rate bonds may actually appreciate in value during periods of rising interest rates. However, if and when the Fed’s tightening campaign slows or ends, floaters can depreciate in price faster than the broader bond market.

Also floating-rate bonds are often lower in credit quality, which means higher yields but higher relative market risk as well.

As with all of our top Fidelity fund choices for 2017, diversification is the key to a successful strategy in the New Year.

As of this writing, Kent Thune did not personally hold a position in any of the aforementioned securities. His No. 1 holding is his privately held investment advisory firm. Under no circumstances does this information represent a recommendation to buy or sell securities.

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