3 / 5 Stars
2 2 5 5 3
Zacks Investment Research
5 (Strong Sell)
Standard & Poor's
3 / 5 Stars
#13 in Retirement Income
U.S. News evaluated 60 Retirement Income Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.
The fund has returned 3.41 percent over the past year, 3.97 percent over the past three years, 7.52 percent over the past five years, and 4.03 percent over the past decade.
|Trailing Returns||Updated 01.31.2014|
|Year to date||-0.2%|
|3 Years (Annualized)||4.0%|
|5 Years (Annualized)||7.5%|
|10 Years (Annualized)||4.0%|
The Fidelity Freedom Income Fund has been chided by some financial analysts for being too risk averse, but manager Jonathon Shelon says the fund’s demographic—investors who are 10 to 15 years into retirement—merits the more conservative tack.
As of February 05, 2014, the fund has assets totaling almost $1.94 billion invested in 26 different holdings. Its portfolio consists of a variety of underlying Fidelity stock, bond, and money market funds.
The fund has morphed a bit since its 1996 inception as management has attempted to find a complementary mix of assets for the risk profile, Shelon says. “We wanted to produce a level of durability but also recognize that inflation is a very powerful ‘eroder’ of purchasing power,” he says. In addition to investing more in commodities over the years, Shelon says Treasury Inflation-Protected Securities (TIPS) now make up a healthy portion of the portfolio as well. The fund has returned 3.41 percent over the past year and 3.97 percent over the past three years.
The fund has only lost money two years out of the past 10 and its trailing returns have matched or slightly underperformed its benchmark over that time period. The fund has returned 7.52 percent over the past five years and 4.03 percent over the past decade.
Intended for investors already 10 to 15 years into retirement, the Fidelity Freedom Income Fund seeks to provide a steady stream of income and some capital appreciation by investing in a mix of Fidelity bond, stock, and money market funds. The fund tends to keep a fairly static distribution of assets with about 55 percent in bond funds, 25 percent in money market funds, and 20 percent in stock funds. Ultimately, all funds in the Freedom series, such as the Freedom 2015 fund, are rolled into the Fidelity Freedom Income Fund 10 to 15 years after reaching their target date.
According to Morningstar, fund managers Jonathan Shelon and Chris Sharpe avoid making bets against market trends with stock funds, which excludes some of Fidelity’s better performing funds such as the Contrafund. Morningstar also notes that this retirement income fund is far more cautious than others in its category.
Role in Portfolio
Morningstar calls this fund a “core” investment.
Jonathan Shelon and Chris Sharpe run the fund and are part of 15-person team dedicated to Fidelity’s asset-allocation products. Morningstar notes that many of the fund’s underlying investments, such as the Fidelity Series Investment Grade Bond fund and the Fidelity Growth Company fund, are managed by veterans with fairly good records. Others, like the Fidelity Series All-Sector Equity fund, are less proven.
Fidelity Freedom Income Fund has an expense ratio of 0.00 percent.
As with other retirement income products, this fund is not a guaranteed source of income.