Index mutual funds invest in diverse companies and track a specific market index, like the S&P 500 (SPX) or Nasdaq 100 (NDX). Apart from providing exposure to these broader indices, these funds typically come with lower fees (expense ratios) when compared to actively managed funds. Today, we have focused on two funds tracking the S&P 500 Index – FXAIX and SWPPX – with at least 10% upside potential projected by analysts over the next twelve months.
Let’s take a closer look at both funds.
Fidelity 500 Index Fund (FXAIX)
The FXAIX fund invests at least 80% of its assets in the stocks included in the S&P 500 Index. Importantly, the fund has no minimum investment requirement and an expense ratio as low as 0.015%. The FXAIX fund has 506 holdings with total assets under management (AUM) of $516.71 billion. Additionally, the fund has a dividend yield of 1.76%. The FXAIX fund has returned about 26.3% in the past year.
On TipRanks, FXAIX has a Moderate Buy consensus rating. This is based on 399 stocks with a Buy rating, 100 stocks with a Hold rating, and seven with a Sell rating. The analysts’ average price target on the FXAIX fund of $203.31 implies about 12% upside potential from the current levels.
Schwab S&P 500 Index Fund (SWPPX)
The SWPPX fund aims to mirror the total return of the S&P 500 Index by investing at least 80% of its assets in index stocks. Furthermore, the low-cost fund comes with no minimum investment. The SWPPX fund has 501 holdings with total assets of $82.59 billion. Additionally, the fund has a low expense ratio of 0.02%. The SWPPX fund has returned about 28% in the past year.
On TipRanks, SWPPX has a Moderate Buy consensus rating. This is based on 399 stocks with a Buy rating, 95 stocks with a Hold rating, and seven with a Sell rating. The analysts’ average price target on the SWPPX mutual fund of $90.07 implies about 12% upside potential from the current levels.
Concluding Note
Mutual funds offer diversification and potentially lower risk compared to individual stocks. Further, they come with several benefits, such as higher liquidity and low minimum investment requirements. However, it would be wise to research well before investing in any of these mutual funds.
