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Best 401(k) Mutual Funds for 2012

Here are two picks for each of five distinct investment classes

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Best International Funds

Dodge & Cox Mutual funds 401(k)Winner: Dodge & Cox International

There are eight managers of the Dodge & Cox International Stock (MUTF:DODFX) mutual fund, and normally that would throw up some red flags. Won’t too many cooks spoil any strategy? Won’t that drive up expenses with so many people on the payroll?

Well, the folks at Dodge & Cox seems to be an asset that allows the fund to pick stocks all over the world with due diligence — with holdings now from Germany’s Bayer to Japan’s Mitsubishi. It also helps that half the crew has been managing this fund since 2001, so it’s not like this is just a farm team for would-be asset managers. The returns of almost 10% annually on average in the past decade prove these folks know their stuff — more than doubling client money over the past 10 years. The benchmark MSCI EAFE Index — that’s Europe, Australasia and the Far East — is up by half as much.

To top it off, expense ratios are low at 0.65% — very reasonable among actively managed global funds, even with a $75 transaction fee. The fund gets four stars from Morningstar.

Runner Up: TCW Emerging Markets Income

TCW Emerging Markets Income Fund (MUTF:TGINX) invests in bonds of emerging-market countries like Venezuela, Brazil and even Nigeria. Though there obviously is higher risk in government or corporate debt in these regions, the returns also can be much higher — sometimes a yield of double digits. The fund’s long-term track record speaks for itself, averaging over 10% annualized returns in the past 10 years — which would have more than doubled your money. The expense ratio is a bit higher at 1.25%, and the risk obviously is greater, but the profits speak for themselves.

Article printed from InvestorPlace Media,

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