If you're looking for a theme among IBD's 2025 list of the Best Mutual Funds, start with Fidelity Investments. The Boston-based financial services company's funds claim nine spots in the U.S. diversified equity category alone. That's just for starters. Fidelity funds won 78 awards across nine categories this year.
Each award-winning fund on the list had to outperform its benchmark for the past one, three, five and 10 years. This demonstrates its ability to outperform in both the short term and long haul. Among funds at least 10 years old, that's a feat only 25% of eligible funds can claim. This year — IBD's 10th annual Best Mutual Funds awards — 946 funds qualified for recognition.
And for good measure, Fidelity was also spotlighted on the 2025 Best Online Brokers report.
Fidelity Investments Commits To Beat The Benchmarks
What makes Fidelity such a powerhouse? "Fidelity is committed to the notion that an active manager, given the proper support and tools, and helped by their low fees, can outperform the benchmarks," says Dan Weiner, board member of RWA Wealth Partners.
Although Fidelity Investments offers hundreds of mutual funds and exchange traded funds, it has always had an emphasis on stocks. Edward C. Johnson II founded the Fidelity Fund in 1930, but the firm went into overdrive as his son, the late Edward C. Johnson III, ascended into fund management.
The younger Johnson took the helm of Fidelity Magellan in 1963 and ran it until 1971, beating the S&P 500 by an annual average of 22 percentage points. He then handed the fund to Peter Lynch, who vaulted the fund into superstar status.
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Top managers tend to stick with Fidelity Investments. William Danoff, head of Fidelity Contrafund (FCNTX), has been at the helm for 34 years. That fund is among the winners in the U.S. Diversified Funds category.
Steven Wymer, skipper of Fidelity Growth Company (FDGRX), has been with the fund for 28 years. That fund ranked No. 3 in the U.S. Diversified Funds category. Fidelity's training programs, where great analysts move into managing sector funds and eventually move up to its banner funds, makes sure that the cream consistently rises to the top, says Weiner.
Fidelity also takes care to keep its long-term performers in their lanes, a change when its go-anywhere Magellan took major swings in style. Managers no longer take such big bets.
"It's incredible how consistent the performance has been over the years," says Morningstar analyst Robby Greengold. The only real surprise you'll get from Fidelity Growth Company, for example, is its $9.4 billion stake in Nvidia, which represents about 14% of the fund's assets.
Despite its growth culture, Fidelity Investments offers more than just red-meat growth funds. "They have so many different strategies, and they do have others that are particularly risk-adverse," Greengold says.
For example, Fidelity Equity-Income (FEQIX), run by Ramona Persaud since 2011, has beaten its index for the past decade by investing in conservative dividend-payers like JPMorgan Chase, Exxon Mobil and Walmart.
The company's bond sector is often overlooked, but it, too, has some stars. Fidelity Capital and Income (FAGIX), for instance, has beaten the average high-yield bond fund for the past 15 years. Similarly, Fidelity Convertible Securities (FCVSX) has beaten funds in its category for the past 15 years. Both those funds rank highly among the winners in the U.S. Taxable Bond category.
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Big Funds, Low Prices
Fidelity has another advantage: "Fidelity is competitive on price," Greengold says. It can afford to be. The privately held company has $5.9 trillion in assets under management, which spins off enough cash that it can offer funds with low expense ratios.
"Their fees are low — not Vanguard low, but low," says Weiner. For example, the average large-company no-load fund charges 0.79%, according to Morningstar. Fidelity Contrafund, has a 0.63% expense ratio. Similarly, Fidelity Growth Company Fund charges 0.52%.
Possibly to the chagrin of its active managers, Fidelity Investments' largest stock fund is the $633 billion Fidelity 500 Index fund, which tracks the Standard & Poor's 500 stock index. Its expense ratio is just a touch below the Vanguard 500 Index fund's expense ratio.
Fidelity Offers Funds For Almost Every Customer
Fidelity's wide range of offerings is among its biggest strengths. But that also can be perceived as a liability. Fidelity is willing to offer nearly any type of fund for its customers. Although it was slow to enter the indexing world — the Fidelity 500 Index fund launched in 2011 — it has clearly been competitive on low cost, which is one of an index fund's main virtues. In fact, Fidelity now has four index funds that have an expense ratio of zero.
Sector funds have long been a staple of Fidelity's lineup, many of which are available in ETF versions. The funds are aimed at investors who want to tilt their portfolio toward technology or health care.
Sometimes, however, Fidelity's sector funds may seem a bit too narrow – such as the Fidelity Disruptive Medicine ETF (FMED). According to the fund's fact sheet, it invests in "companies that have or are developing new or unconventional ways of doing business that could disrupt and displace incumbents over time." Critics would say that Fidelity Select Health Care Portfolio (FSPHX) could cover the territory that FMED already covers well.
But Fidelity Investments doesn't just roll out new funds to see what happens. "When they launch a fund, they intend it to have longevity. They support that product," Greengold says.
