Fidelity Freedom 2040 Fund
Mutual funds can be a great way to diversify a portfolio. A mutual fund allows an investor to put their funds into many different stocks at once without having to research a bunch of different companies. This can be a great way for a novice investor to get into investing. Instead of you managing your portfolio, the mutual fund manager will in a sense manage the fund for you. Another great thing about mutual funds is that you can achieve great diversification without having to pay hundreds of dollars in commissions.
The fund in particular that I am reviewing today is the Fidelity Freedom 2040 Fund (FFFFX). Fidelity has created a family of funds that are targeted for specific retirement dates. It is optimum if you choose the fund that is closest to your projected retirement date. The funds are set up in a way so that in their early years they are fairly aggressive, and as the fund gets closer and closer to the projected retirement date it gets more and more conservative. In the end this fund will merge with the Freedom income fund. This is how an investor should structure their investments, so it helps to take a lot of the guesswork out of allocating your investments.
The Freedom 2040 fund invests in a number of different Fidelity funds. As of the writing of this article, the fund is composed of:
| U.S. Equity Funds | 67.3% |
| Non-U.S. Equity Funds | 17% |
| Investment Grade Bond Funds | 5.8% |
| High Yield Bond Funds | 9.8% |
| MM/Short Term Funds & Other net assest | .1% |
Currently the fund is down 7.91% for the year so it is at a bit of a discount for those who want to get in on it. This drop in value could be explained because of the fund’s high investment in U.S. Equity funds while the U.S. market has been going through a correction. Over the past 5 years, the fund has produced a 14.59% APY. Based on the target date of 2030+, Morningstar gives the fund 4 out of 5 stars. Lipper gives them a 1 year ranking of 247 out of 1598 Growth and Income funds.
The minimum investment for this fund is $2500.
I currently have a financial position in this company. You can see all of my current positions here.
As always, I recommend that you do your own due diligence before investing in something. I always try to provide pertinent and trustworthy links so that this can be easily done.
February 1st, 2008 at 12:34 am
I found your site on technorati and read a few of your other posts. Keep up the good work. I just added your RSS feed to my Google News Reader. Looking forward to reading more from you.
Allen Taylor