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3 Great Funds for Your IRA in 2023

These funds are excellent core options for your IRA.

3 Great Funds for Your IRA in 2023

Russ Kinnel: Picking funds for an IRA requires a little strategic thinking. First, you have to think about time horizon. Typically, investors hold them through retirement. So, if you are retiring in 20 years, your time horizon is really something like 20-40 years total. That long horizon enables you to be patient and invest for the long haul.

Also, because IRAs are tax-sheltered they free you up to buy less-tax-efficient vehicles. But it’s important to keep in mind that time horizon takes precedence, so you don’t want to pick a fund simply because it is not tax-efficient.

3 Great Funds for Your IRA in 2023

These funds earn Morningstar Analyst Ratings of Gold.

  1. Vanguard Dividend Growth VDIGX
  2. Dodge & Cox International Stock DODFX
  3. FPA Crescent FPACX

One great core option is Vanguard Dividend Growth, a Gold-rated fund subadvised by Wellington. The idea here is to buy stocks whose dividends could get raised. That leads them to companies that are healthy and have strong balance sheets and therefore tend to hold up well in recessions. In sum, it’s one of the best risk/reward profiles you can find.

Dodge & Cox International is another great choice. The firm is a fundamental value shop with a great analyst bench. It is a very long-term-oriented company, and it occasionally gets hurt in value corrections, but it tends to work out well over the long haul. I own this fund in my 401(k).

Finally, Gold-rated FPA Crescent is a mix of caution and aggression. Steve Romick is a seasoned investor who invests with a value tilt. He tends to hold a lot of cash in order to reduce the downside and also to have some ready powder for selloffs. He looks for cheap investments that have limited downside but sizable upside. This fund is really one of a kind. No other fund does quite what it does.

Watch “3 Great Funds for 2023 and Beyond” for more from Russ Kinnel.

The author or authors own shares in one or more securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Russel Kinnel

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Russel Kinnel is director of ratings, manager research, for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He heads the North American Medalist Rating Committee, which vets the Morningstar Medalist Rating™ for funds. He is the editor of Morningstar FundInvestor, a monthly newsletter, and has published a number of prominent studies of the fund industry covering subjects such as manager investment, expenses, and investor returns.

Since joining Morningstar in 1994, Kinnel has analyzed virtually every type of fund and has covered the most prominent fund families, including Fidelity, T. Rowe Price, and Vanguard. He has led studies on the predictive power of fund data and helped develop the Morningstar Rating for funds and the Morningstar Style Box methodology. He was co-author of the company's first book, Morningstar Guide to Mutual Funds: 5-Star Strategies for Success (Wiley, 2003), and was author of the book Fund Spy: Morningstar's Inside Secrets to Selecting Mutual Funds That Outperform, published in 2009.

Kinnel holds a bachelor's degree in economics and journalism from the University of Wisconsin.

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