Building a Resilient Portfolio: Why Fidelity Funds Offer Protection During Economic Uncertainty

The U.S. financial markets have demonstrated mixed signals throughout 2024. While major indices including the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average have delivered gains of 9%, 7.9%, and 2.9% respectively, recent economic data has sparked fresh concerns about the path ahead. The Consumer Price Index declined 0.1% in June—the first drop in over four years—with year-over-year inflation moderating to 3%. The Federal Reserve’s preferred inflation measure, the Personal Consumption Expenditure index, also signaled progress with a 0.1% monthly increase in June.

However, optimism was tempered by an unexpected employment weakness report. The U.S. unemployment rate climbed to 4.3%, marking the fourth consecutive monthly increase. This shift, combined with the Federal Reserve’s decision to maintain interest rates in the 5.25-5.50% range, has reignited recession fears. The central question now facing investors is whether the Fed can achieve a soft economic landing while sustaining its restrictive monetary policy to meet its 2% inflation target.

Why Diversified Mutual Funds Matter in Uncertain Times

In volatile market environments, diversified mutual funds have emerged as a practical solution for investors seeking exposure across multiple asset classes without requiring deep technical expertise. These vehicles naturally spread risk by holding baskets of securities across different sectors and geographies, reducing the impact of any single holding’s poor performance. Unlike individual stock purchases, mutual fund investments typically involve lower transaction costs and eliminate commission structures associated with direct equity trading.

Fidelity Investment stands as a trusted partner in this space. Headquartered in Boston and founded in 1946, the company manages $12.6 trillion in assets across more than 44.2 million individual accounts globally. With over 7,400 associates distributed across North America, Europe, Asia, and Australia, Fidelity conducts extensive research to identify attractive opportunities for its clients. The firm offers zero-load mutual fund products sold directly to investors, removing unnecessary intermediary charges.

Five Recession-Resistant Fidelity Funds Worth Considering

We’ve identified five Fidelity mutual funds that have demonstrated resilience and positive performance trajectories. Each carries a Zacks Mutual Fund Rank of #1 (Strong Buy), maintains an expense ratio of 1% or less, and requires a minimum initial investment below $5,000. All have posted positive returns across year-to-date, three-year, and five-year annualized periods.

Technology Exposure: Fidelity Advisor Semiconductors (FELIX)

FELIX concentrates its portfolio in semiconductor manufacturers and equipment suppliers globally. The fund employs fundamental analysis examining financial health, industry positioning, and macroeconomic conditions to guide its security selections. Since taking the lead management role in March 2020, Adam Benjamin has navigated the sector through two market cycles.

As of June 30, 2024, FELIX delivered year-to-date returns of 45.6%, three-year annualized returns of 28.8%, and five-year annualized returns of 37.3%. The fund’s 0.73% annual expense ratio represents solid value for concentrated sector exposure. The portfolio maintains significant allocations to major semiconductor companies, reflecting the sector’s importance to artificial intelligence infrastructure and global technology advancement.

Energy Sector Diversification: Fidelity Advisor Energy (FANIX)

FANIX takes a comprehensive approach to energy exposure, investing across conventional sources including oil, gas, electricity, and coal, alongside emerging alternatives such as nuclear, geothermal, and solar power. This dual approach provides both current income streams from established energy producers and growth potential from renewable transition themes. The fund has been managed by Maurice FitzMaurice since January 2020.

Through June 30, 2024, FANIX achieved year-to-date returns of 12.1%, three-year annualized returns of 25.7%, and five-year annualized returns of 13.5%. Operating with a 0.73% expense ratio, FANIX enables investors to gain balanced energy sector exposure without the complexity of analyzing individual energy companies or clean energy startups.

Natural Resources and Commodities: Fidelity Natural Resources Fund (FNARX)

FNARX casts a wider net, combining precious metals with stocks of companies engaged in natural resource extraction and development. This approach appeals to investors seeking inflation hedges and portfolio diversification beyond traditional equities and bonds. Ashley Fernandes has managed the fund since January 2021, overseeing allocation decisions across mining, oil and gas, and metals companies.

The fund posted year-to-date returns of 14.4%, three-year annualized returns of 21.7%, and five-year annualized returns of 14.1% as of June 30, 2024. With an annual expense ratio of 0.76%, FNARX offers exposure to cyclical assets that historically perform well during inflationary periods and economic recoveries.

Core Equity Holdings: Fidelity Large Cap Stock (FCLKX)

FCLKX provides foundational equity exposure through large-capitalization companies comparable to Russell 1000 and S&P 500 constituents. The fund’s diversified approach spans both domestic and international large-cap names, offering stability through market cycles. Matthew W. Fruhan has directed the fund since May 2017, maintaining a disciplined investment process.

Performance through June 30, 2024 showed year-to-date returns of 17.0%, three-year annualized returns of 12.7%, and five-year annualized returns of 16.1%. At just 0.45% annually, FCLKX’s expense ratio is among the industry’s most competitive, making it an efficient core holding for recession-resistant portfolios.

Healthcare Sector: Fidelity Select Pharmaceuticals Portfolio (FPHAX)

FPHAX focuses on pharmaceutical and drug development companies across research, manufacturing, and distribution. The healthcare sector historically demonstrates resilience during economic downturns, as demand for treatments remains stable regardless of economic conditions. Karim Suwwan de Felipe has managed the fund since July 2017, navigating the sector through various regulatory and competitive dynamics.

As of June 30, 2024, FPHAX delivered year-to-date returns of 26.6%, three-year annualized returns of 12.3%, and five-year annualized returns of 15.2%. The 0.74% expense ratio provides access to diversified pharmaceutical exposure without bearing the risk of individual drug trial outcomes.

The Path Forward

Economic uncertainty often prompts portfolio reviews and reallocation decisions. Rather than attempting to time market cycles or predict recession timing, investors can employ diversified mutual funds offering broad sector exposure. Fidelity’s suite of sector-focused and large-cap funds enables construction of balanced portfolios aligned with individual risk tolerance and time horizons. The combination of zero-load distribution, competitive expense ratios, and demonstrated historical performance positions these funds as viable instruments for navigating the current environment.