3 Retirement Funds That Can Boost Your Portfolio

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3 Retirement Funds That Can Boost Your Portfolio

These three mutual funds offer different strategies to help you meet retirement goals.

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For many of us, retirement planning can be a daunting task. With tens of thousands of individual stocks and mutual funds to choose from, there’s virtually no shortage of options. Individually assessing each one will assure a “paralysis by analysis.” Over-thinking can be just as bad as under-thinking. Worse, it can lead to indecisiveness. Getting into the retirement planning game is almost always better than sitting on the sidelines.

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The ubiquitous 401k plan has made life much easier for all of us, even for battle-hardened investors. Retirement funds typically offer a basket of different stocks, bonds, and other tradable securities under one umbrella. Thus, your 401k retirement portfolio isn’t dependent upon any single entity’s fortune (or misfortune). Mutual funds spread the risk around, which is especially important during periods of economic uncertainty.

However, not all mutual funds are built the same. Until the day computers can replace our instinctual intelligence, retirement planning is very much a human affair. Since no two people are completely alike, it should come as no surprise that retirement funds feature varying degrees of performance. Knowing which ones are tailored to your specific needs and goals can make all the difference.

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Here are three mutual funds that can significantly boost your 401k retirement plan.


Dodge & Cox Stock Fund (DODGX)

Any long-term financial strategy will have to incorporate balanced retirement funds. The Dodge & Cox Stock Fund (DODGX) is a prime example. Among mutual funds that are available in many 401k plans, the DODGX has a strong mix of reputable, American blue chips. Around 80% of the retirement fund’s portfolio is exposed to S&P 500 companies, while 20% could come from foreign firms.

The top three holdings of the DODGX are centered in the financial sector: Wells Fargo & Co (WFC), Capital One Financial Corp. (COF), and Bank of America Corp (BAC).

Admittedly, bank stocks have had a rough year. However, other names in the top 10 holdings include Hewlett Packard Enterprise Co (HPE) and Time Warner Inc (TWX). Year to date, these two stocks average 20%, helping to offset the losses incurred in the banking sector.

Overall, DODGX is up 5.8% for the year, which is roughly 1% behind the benchmark S&P 500 index. DODGX, mutual funds, retirementHowever, it’s important not to judge mutual funds based on one year’s data. Since 1980, the DODGX averages returns of 13%, well above the 8% benchmark cited for many retirement funds. In addition, the DODGX handily beats out the S&P 500, which comes in at less than 10% average returns.


The Dodge & Cox Stock Fund is one of the more stable mutual funds, and definitely deserves consideration for your 401k plan.

Fidelity Diversified International Fund (FDIVX)

Variety is the spice of life, and the same can be said about mutual funds. As humans, we are creatures of habit. Naturally, many of us trust our retirement funds on companies that we are familiar with. However, foreign stock markets can often boost our returns due to undervalued or underappreciated opportunities. That’s the main goal of the Fidelity Diversified International Fund (FDIVX), which is one of a growing number of internationally-focused mutual funds.

FDIVX’s top three holdings cover a wide variety of industries and countries — Denmark’s Novo Nordisk A/S (ADR) (NVO), Japan’s ORIX Corp NPV (ORXCF), and Belgium’s Anheuser Busch INB NPV (AHBIF). Although FDIVX is easily one of the most diverse retirement funds, the broad uncertainty in global markets have hurt this year’s performance. On a YTD basis, FDIVX is up less than 1%, far below the 7% of the S&P 500.

As with domestic mutual funds, don’t let any one statistic be your deciding factor. FDIVX, mutual funds, 401k, retirementSince the introduction of FDIVX at the tail end of 1991, the retirement fund has returned more than 9%. Over the same time frame, the S&P has returned 8%. Awareness of international developments is key. When FDIVX is on, it can return twice the profit of the U.S. markets, or more. When it’s off, the opposite is true.


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With some timing and risk tolerance, though, FDIVX can be a powerful asset for your 401k.

Fidelity Puritan Fund (FPURX)

For investors who don’t want to go too far off the beaten path, but still want some risk-reward plays, the Fidelity Puritan Fund (FPURX) may be just what the broker ordered. A majority of the retirement fund’s holdings are familiar, American blue chips. However, a good chunk of the held securities are debt securities, some of which are classified as less than investment-grade quality. Thus, FPURX has a bit of spice that’s missing from the more steady and true DODGX.

The added risk is evident in the top 10 holdings, which include three of the four “FANG” stocks — Facebook Inc (FB), Amazon.com, Inc. (AMZN), and Alphabet Inc (GOOGL). With the exception of Netflix, Inc. (NFLX), the FANG stocks have done quite well this year. However, the cyclical nature of these companies is a concern, particularly if the U.S. economy hits a rough patch. For now, FPURX is one of the better performing mutual funds, up 5% YTD.

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Admittedly, the Puritan Fund’s long-term performance is only slightly better than the S&P 500. But its claim to fame is its hedging ability. Because FPURX isn’t as levered to equities as other mutual funds, it weathers volatility in superior fashion. For example, the unprofitable years of DODGX averages nearly -12%. In contrast, FPURX averaged -5%. The difference is quite stark when compared to FDIVX, where its off years average -15%. The Puritan Fund? Try a cool 9% in the black.


This article is from Josh Enomoto of InvestorPlace.

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