15 Best Performing Funds for Your 401(k)
US News And World Report
Feb. 27, 2020
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Dejan Ilijevski, investment advisor and president at Sabela Capital Markets, says investors who have access to Dimensional Fund Advisors should consider adding those to their 401(k) portfolios. “Their holdings tilt toward the factors that are expected to have higher returns in the long run, based on decades of global, historical data, including size, value and profitability,” he says. Ilijevski chooses DFQTX for a total U.S. market fund. Compared to an index such as the Russell 3000, the fund overweights smaller, undervalued companies, which tend to offer higher expected returns, he adds.
DFIEX captures returns from developed markets outside of the U.S. “It emphasizes smaller, undervalued stocks, which we expect to provide higher returns over the long run,” Ilijevski says. Like DFQTX, the fund has a smaller stock tilt versus its benchmark, MSCI World ex-USA Index. It has $34 billion in assets under management, with a low expense ratio of 0.30% annually. It has a 12-month yield of 3%, and very low turnover of just 4%, meaning that managers do little trading of holdings. With more than 5,300 stocks, it’s a well-diversified fund.
In emerging markets, Ilijevski picks DFCEX. Like other DFA funds, this vehicle focuses on smaller, undervalued stocks, this time in emerging markets. This fund may complement investors other emerging market holdings with its smaller stock tilt. “Over the long run, (by) tilting holdings toward proven factors that have higher expected returns, these funds have traditionally done better,” he says. U.S. News ranks it No. 49 among 793 diversified emerging markets funds. Ilijevski says if its available to investors, he likes the combination of DFQTX, DFIEX and DFCEX, saying the three funds will capture equity returns from the global stock markets as together all three hold about 14,000 stocks.
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