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5 Favorites for Your IRA The Contrarian | Russel Kinnel

FPA Crescent FPACX Steve Romick’s fund doesn’t cover nearly as much ground as the above options, but its mix of aggression and caution still make it a strong choice for your IRA . Romick looks for cheap stocks with strong long-term potential, but he doesn’t stop there. He looks for other creative ways to generate strong returns, includ- ing unusual debt or real estate deals, as well as bonds. He also typically holds a big slug of cash. The result is a fund that generally loses less in down markets while still enjoying respectable returns in rallies. Loomis Sayles Bond LSBDX Many investors like to put a bond fund in their IRA because they don’t have to pay taxes on the income. However, IRA s are meant to be long-term holdings, so you want some strong return potential. Dan Fuss and team deliver that in this wide-ranging bond fund. They buy lots of lower-quality debt from corpo- rate issuers and foreign countries. They even buy convertibles and a small amount of stocks. The record here is outstanding, but be wary of that credit risk. This fund will feel it when we hit the next pothole in the economy. It’s best for investors who have very little high-yield or foreign debt exposure today. If you already have a lot, this is probably not the time to raise your bets. Harding Loevner Emerging Markets HLEMX There aren’t many contrarian bets to make today, but emerging markets lost money in 2013 ’s big equity rally, and with signs of slowing growth in China they may continue downward. But valuations may be cheap enough to make emerging markets a good buy anyway. Harding Loevner isn’t a household name, but it has impressed us with its expertise in finding bargains in a lot of markets. Its approach is to find quality at a modest price. It has done such a good job that the fund has strong long-term returns and typically loses less in downturns. œ Contact Russ Kinnel at russel.kinnel@morningstar.com

It’s IRA season as investors rush to get in before the April 15 deadline, but in truth it’s always IRA season. As Christine Benz points out on Page 16 , you can start your IRA 15 months before that deadline.Think how much more you’d have if you started your IRA in Jan- uary 2013 rather than April 2014 . Most years won’t be that great, but the market does go up most years. With that in mind, here are some great funds for your IRA that you can put to use as soon as you free up the money. Vanguard Target Retirement 2030 VTHRX This fund is a great set-it-and-forget-it option for your IRA . It’s cheap, covers a wide swath of the invest- able market, and adjusts over time. If you already have plenty of funds, here’s a way to simplify things by giving you one account that you don’t have to fret over. Vanguard has target-date funds that aim for a retirement date every five years, so you should be able to find one that syncs up with your retirement plans. The funds hold varying mixes of Vanguard Total Stock Market Index VTSMX , Vanguard Total International Stock Index VGTSX , Vanguard Total Bond Market II Index VTBIX , and Vanguard Total International Bond Market Index VTIBX . Dodge & Cox Global Stock DODWX Staying with my wide-net theme, I have chosen a world-stock fund that covers a lot of ground. Dodge & Cox Global Stock builds off of Dodge’s strength in researching stocks around the globe. It takes a value bent and has the patience to see the payoff. But don’t look for Dodge to hop around in search of the best markets. It tends to move slowly. This is more of a pure issue-selection vehicle. With a deep team and low expenses of just 0 . 65% , this should be a fund you can own for a long time.

Our Contrarian Approach I go against the grain to find overlooked funds that may be ready to rally.