Barron's Chooses Funds for Coping with Inflation
With consumer prices soaring 8.3% in the 12 months through April, you may be looking for investments that can withstand or benefit from inflation.
With that in mind, Barron’s lists several mutual funds, including DWS RREEF Real Assets (AAAAX Get DWS RREEF Real Assets A Report, Fidelity Large Cap Stock (FLCSX Get Fidelity Large Cap Stock Fund Report and Dodge & Cox Income (DODIX Get Dodge & Cox Income Report.
As for DWS RREEF, it has a combination of commodity, infrastructure and real estate assets.
The fund drew a Morningstar rating of bronze, the third highest after gold and silver.
“A deep team plies a proven approach to real asset investing [at the fund]," Morningstar analyst Bobby Blue wrote in a commentary.
"[Fund manager Evan Rudy] combines [his] teams’ proven bottom-up research with an effective approach to tactical allocation,” Blue said.
“The team takes consensus estimates on the speed of future economic growth and inflation, and allocates accordingly to assets that have done well in those scenarios in the past.”
The fund may not match the movements of more diversified peers.
"[But] the team has shown an ability to deliver compelling results across a full cycle,” Blue said.
Fidelity Large Cap
Barron’s notes that Fidelity Large Cap has a bigger stake in energy stocks than its peers.
Energy stocks are benefiting from higher energy prices. This fund, too, has a Morningstar rating of bronze.
It has an “experienced manager” in Matt Fruhan and “deep analytical resources,” Morningstar analyst Robby Greengold wrote in a commentary.
"[Fruhan has] consistently plied a gritty approach that often embraces unloved or fundamentally challenged companies and avoids firms whose shares he thinks have been bid up by market mania,” Greengold said.
“The process is not intrinsically contrarian,” he notes. The fund’s No. 1 holding as of March 31 was Microsoft MSFT.
“Rather, it is valuation-centric,” Greengold said.
“Fruhan has long doubted that the growth expectations baked into many of the S&P 500’s best-performing stocks are achievable.”
Dodge & Cox Income
Barron’s cites the bond fund for its low cost and an average duration under five years.
Lower duration bonds are generally less risky. DODIX has an expense ratio of 0.41%, according to Morningstar.
It gives the fund a gold rating.
Morningstar analyst Sam Kulahan cites “an experienced team, a robust long-term investment approach, and an attractive price tag.”
The fund’s success “owes to its relatively patient and at-times contrarian approach to investing,” Kulahan wrote in a commentary.
The managers “start with an investment horizon of three to five years,” he said.
“They tend to favor corporates, noting that the yield advantage offered by these securities is an important contributor to total returns over time, and run a fairly compact, mostly cash-bond portfolio.”