3 Funds for a Bull Market

Russel Kinnel: Today, I’ve got three picks for a bull market. The latest economic news is great. Inflation is slowing down to modest levels, and unemployment is at historically low levels. The soft landing may actually happen. But first, let’s pause to remember how hard it is to make forecasts. Markets have been shaken by a pandemic, Russia’s attack on Ukraine, and a mini meltdown in regional banks. Those were all incredibly hard to predict, so let’s remember, you never want to bet the ranch on a particular forecast.

OK, with that caveat aside, here are three funds that might have a nice run in a bull market.

3 Funds for a Bull Market

1. Dodge & Cox Global Stock DODWX
2. Primecap Odyssey Growth POGRX
3. Vanguard Total Stock Market VITSX VTI

First, there’s Dodge & Cox Global Stock. It’s a global value fund with low costs and excellent management. Yes, U.S. large growth has been the best spot in recent years, but that’s why global value might be the better bet today. Markets are cyclical. In any case, Dodge & Cox is a patient, value-oriented firm that has proven adept both overseas and in the U.S. The fund got burned by financials in 2008, but it’s been rewarding people who stuck with it since then.

Next, there’s Primecap Odyssey Growth. Primecap is really like a growth version of Dodge & Cox. They get analysts and managers to spend their whole careers at the firm, and they just pick stocks better than most people out there. The fund typically tilts toward healthcare relative to peers. In fact, it currently has a third of assets in healthcare.

Finally, I picked a very obvious fund. Vanguard Total Stock Market, available in both open-end and ETF forms. Index funds tend to do a little bit better than peers in rallies and a little bit worse to middling in bear markets. The main reason is they have no cash on hand to cushion the blow or slow them down in rallies. But another reason to own a broad index fund like this one is it gives you exposure to everything. Every rally is different. You might have some favorite funds or stocks with a bias toward one sector and not so much in other areas. With a fund like this, you won’t miss out if you picked the wrong horse. And believe me, everyone picks the wrong horse from time to time.

I don’t own any of these funds, but I do own funds that are adjacent to them. I own one Dodge & Cox fund, three Primecap funds, and two Vanguard index funds.

Watch “3 Good Funds Having a Bad Year” for more from Russel Kinnel.