Roth IRA Fund Options From Fidelity

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A Fidelity Roth IRA can hold far more than Fidelity’s own funds. Within one account you can buy Fidelity’s in-house mutual funds and exchange-traded funds (ETFs), mutual funds from other fund companies (Fidelity offers access to more than 10,000 in total), individual U.S. stocks, ETFs from other issuers, and options. If you would rather not pick investments yourself, Fidelity also offers a professionally managed version, Fidelity Go. For a self-directed account, two broad, low-cost index funds often anchor a simple portfolio: the Fidelity Total Market Index Fund (FSKAX) for stocks and the Fidelity U.S. Bond Index Fund (FXNAX) for bonds.

The sections below cover what each of those funds owns, how they fit together, what the account costs, and how to put money to work once it is open.

What a Fidelity Roth IRA Can Hold

Fidelity, legally FMR LLC, was founded in 1946 as Fidelity Management & Research. Today it runs hundreds of its own mutual funds and ETFs and also operates a brokerage that sells other companies’ products. That combination is what makes the investment menu so wide.

The main choices fall into a few groups:

• Fidelity mutual funds: index funds such as FSKAX and FXNAX, plus actively managed funds and target-date funds.
• Third-party mutual funds: funds from other fund families, available through Fidelity’s platform.
• ETFs: Fidelity’s own ETFs and those from other issuers. Online ETF trades are commission-free.
• Individual U.S. stocks: also commission-free when traded online.
• Options: online option trades are commission-free as well. Fidelity sets its own approval requirements for options trading.

Mutual funds and ETFs work differently when you trade them. A mutual fund order fills once per trading day at the fund’s net asset value (NAV), calculated after the market closes. An ETF trades on an exchange throughout the day at whatever price the market sets, which can sit slightly above or below the value of its holdings. For a long-term retirement account, the difference matters less than cost and diversification. Mutual funds are still convenient if you want to invest exact dollar amounts on a schedule.

Fidelity Total Market Index Fund (FSKAX)

FSKAX is an index mutual fund that aims to match the performance of the Dow Jones U.S. Total Stock Market Index. That benchmark covers the investable U.S. stock market, so the fund holds thousands of companies across large, mid and small caps, in both growth and value styles. It commits to investing at least 80% of its assets in stocks included in the index. The fund launched on Nov. 5, 1997.

The fund’s own documents listed an expense ratio of 0.015% as of 2024. That is among the lowest costs available for a broad stock fund. On a hypothetical $10,000 position, it works out to $1.50 a year.

Because the index is weighted by market capitalization, the largest companies make up the biggest share of the fund. Its returns therefore tend to look broadly similar to the S&P 500, which tracks only large U.S. companies. The difference is that FSKAX adds exposure to mid- and small-cap stocks that the S&P 500 leaves out.

An all-stock fund carries full equity-market risk. Its value can fall sharply in a downturn and may take years to recover. That makes it a common core for investors with a long time horizon. Someone close to retirement, or with low tolerance for swings, may want a large share of the account in something steadier.

Fidelity U.S. Bond Index Fund (FXNAX)

FXNAX is an index mutual fund that tracks the Bloomberg U.S. Aggregate Bond Index, the standard benchmark for the U.S. investment-grade bond market. It invests at least 80% of its assets in securities included in that index. The fund dates to March 8, 1990, and Fidelity listed its expense ratio at 0.025% as of 2024.

The portfolio holds thousands of bonds. The largest groups are:

• U.S. Treasury securities, which make up the biggest single slice
• Corporate bonds from investment-grade issuers
• Mortgage-backed securities (MBS), mainly pass-through securities backed by home loans
• Smaller amounts of government-related debt, commercial MBS, asset-backed securities, and dollar-denominated bonds from non-U.S. issuers

Essentially all holdings are rated investment grade, meaning BBB or higher.

A broad bond fund generally swings less than a stock fund, but it also offers less growth potential, so long-run returns are usually lower. It is not risk-free. When interest rates rise, existing bond prices fall, and the fund’s NAV falls with them. Its main role in a Roth IRA is to cushion the portfolio when stocks drop and to provide income that gets reinvested tax-free.

Combining a Stock Fund and a Bond Fund

Holding both funds gives you a diversified portfolio with two positions. This follows the logic of modern portfolio theory: assets that do not move in lockstep can lower overall volatility for a given level of expected return. The split between them reflects your time horizon and risk tolerance. A younger investor might lean heavily toward stocks, and someone nearing retirement might shift more toward bonds.

Hypothetical example (for illustration only). Suppose you contribute $5,000 and choose an 80/20 stock-to-bond mix:

These figures assume the expense ratios stay at their 2024 levels and ignore market movement during the year.

Now assume stocks rally and the FSKAX position grows to $5,000 while FXNAX stays at $1,000. The account is worth $6,000 and is now about 83% stocks. To return to 80/20, you would hold $4,800 in FSKAX and $1,200 in FXNAX, which means selling $200 of FSKAX and buying $200 of FXNAX. In a taxable brokerage account, that sale could trigger capital gains tax. Inside a Roth IRA, it has no tax consequence, so you can rebalance as often as your plan calls for.

Over decades, reinvested dividends and interest compound inside the account without annual tax drag. Simple vs. compound interest explains the mechanics behind that growth.

Building Beyond the Core

These two funds can be the whole portfolio, or a base you add to. Investors with more time and interest sometimes layer on narrower positions, such as a small-cap fund, an international fund, or individual stocks. Those additions carry more concentrated risk than a total-market fund. Keeping the core in broad index funds limits how much any single bet can hurt the overall account.

Self-Directed Account vs. Fidelity Go

Fidelity offers two ways to run a Roth IRA:

• Self-directed (retail) Roth IRA: you choose and trade every investment yourself, from the full menu above.
• Fidelity Go Roth IRA: a professionally managed account. You pick an investment strategy and Fidelity builds and maintains the portfolio. It begins investing according to your chosen strategy once the account balance reaches at least $10.

The managed route suits someone who wants an allocation handled for them. The self-directed account gives you full control and access to the complete fund and stock lineup.

Fees and Minimums

A Fidelity Roth IRA has no opening cost and no annual account fee, and there is no minimum investment to open either the retail or the Fidelity Go version. Online trades of U.S. stocks, ETFs and options are commission-free.

The investments themselves can still carry costs:

• Fund expense ratios, deducted from fund assets rather than billed to you
• Management fees on managed services
• Low-balance fees on certain funds
• Short-term trading fees on some mutual funds if you sell shortly after buying

Check each fund’s prospectus or fact sheet before buying. Index funds like FSKAX and FXNAX sit at the low end of the cost range, while actively managed funds generally charge more.

How to Open and Invest a Fidelity Roth IRA

1. Confirm eligibility. You need earned income to contribute, and the IRS phases out direct Roth contributions above certain income levels. The annual contribution limit is set by the IRS and adjusts over time.
2. Choose self-directed or Fidelity Go. Decide whether you want to pick investments or have them managed.
3. Open the account with Fidelity and name beneficiaries.
4. Fund it. You can make a new contribution from a bank account, or transfer an existing IRA from another provider.
5. Invest the cash. In a self-directed account, contributed money does not invest itself. You still need to place orders for the funds or stocks you want. In Fidelity Go, the account invests automatically once the balance reaches $10.
6. Set a schedule and rebalance. Regular contributions to the same funds, plus occasional rebalancing, keep the allocation on target.

Roth Tax Rules That Shape Fund Choice

A Roth IRA is funded with after-tax dollars, so contributions are not deductible as they can be with a traditional IRA. In return, qualified withdrawals, including all the growth, come out tax-free. You can withdraw your contributions at any time without tax or penalty. Earnings are a different matter: generally, you must be at least 59½ and have held the account for five years to take them out tax-free. Roth IRA withdrawal rules and the 5-year rule covers the exceptions.

Because growth is never taxed on qualified withdrawals, a Roth IRA is a natural home for the assets you expect to grow the most over time. That is one reason many investors weight a Roth heavily toward a broad stock fund like FSKAX. Bond interest from FXNAX also escapes tax here, which matters because that interest would be taxed as ordinary income in a regular brokerage account.

The Bottom Line

The best mutual fund for a Fidelity Roth IRA depends on your timeline and risk tolerance, not on a single universal pick. For a low-cost, diversified starting point, FSKAX covers the entire U.S. stock market and FXNAX covers U.S. investment-grade bonds, both at very small expense ratios. You can use them alone in whatever proportion fits your situation, or as a base for other funds, ETFs or stocks from Fidelity’s broader menu. If you would rather not manage the allocation yourself, Fidelity Go handles it once the account holds $10.