CHOOSE THE BEST FUNDS IN YOUR 401(k)

Our guide can help you make the most of your workplace retirement plan.

- NELLIE S. HUANG

INVESTING wisely in your 401(k) could make the difference between a retirement spent drinking latte macchiatos at the local Starbucks and one spent sipping an espresso outside a Paris bistro every two years or so.

To help you make good choices, we analyzed the 10 most widely held, actively managed funds in employer-based retirement savings plans, according to the latest data from BrightScope, a unit of ISS Market Intelligence. We’ve rated each fund “buy,” “sell” or “hold” below, ranked in order of retirement plan assets. Four earn a “hold”; the remaining six fetch “buy” ratings. A table of the 75 biggest 401(k) funds—indexed and actively managed—appears on page 35. We excluded index funds from our detailed reviews below because index funds are built to track a benchmark, and in large part they do that. We also excluded target-date funds because we’re generally fans of each of the target-date series that rank among the top 75 funds. In the table and on the following pages, we cite returns and data through October 31, unless otherwise noted, for the share class of each fund that is most available to retail investors.

American Funds EuroPacific Growth: HOLD

We want to love EuroPacific Growth, which is one of just six foreign stock funds among the 75 popular 401(k) funds, and the biggest of them by far. It invests in developing and emerging countries. Many of its 13 managers have decades of experience. Plus, the fund charges a belowaverage expense ratio. But its performance is just so-so. EuroPacific Growth beat its bench-portfolio, but it’s best for investors with a stomach for volatility and a long investment time horizon. Over the past 15 years, Primecap’s 14.5% annualized return beat the S&P 500 and 97% of the fund’s peers (large blend funds). Between 2019 and 2021—a go-go period for the broad market—the fund lagged its peers for three straight years, albeit with double-digit returns.