For many young workers with Fidelity Investments 401k retirement plans, the automatic and often recommended investment choice is the Fidelity Freedom 2040 Fund, a generic mix of large growth domestic and international stocks pre-packaged for the aggressive, long-term investment strategy of somebody aiming to retire around 2040.
While Fidelity Freedom 2040 is not a bad fund (Morningstar gives it three stars and sees strong governance), the International Discovery Fund, currently available to many Fidelity 401k retirement plan participants, is a stalwart choice that should not be overlooked by investors under 30 as an alternative to Fidelity’s cookie cutter suggestion.
The International Discovery Fund boasts a 17.30% 5-year return and beat its peers by over 3%. With numerous energy holdings and a large stake in successful Japanese automaker Toyota, the fund displays an encouraging balance of opportunity and stability.
Perhaps the only pock mark on the International Discovery Fund is its popularity. With just under $7.5 billion in assets under management, some analysts worry if the fund’s strategy can withstand the volume. Don’t be surprised if the fund closes to new investors like its sister fund, Fidelity Diversified International.