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Best Undiscovered Funds

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Of the more than 8,000 mutual funds and more than 2,000 ­exchange-traded funds (ETFs) in the US, there are many that are well-known and that have impressive performance records. But there also are some gems that most investors have never heard of—and that might boost your investment returns for years to come. Here are three of my favorite undiscovered funds right now…

GQG Partners Emerging Markets Equity (GQGPX). Emerging-market stocks have heated up this year, but they can be very volatile. Rajiv Jain, who was named “International-Stock Fund Manager of the Year” by fund research firm Morningstar Inc. in 2012 when he ran the Virtus Vontobel Emerging Markets Opportunities Fund, focuses on relatively sturdy companies at the GQG fund, which debuted in late 2016. The Virtus fund, which ranked in the top 1% of its category during Jain’s decade-long tenure, was significantly less volatile than its typical peer.

Tributary Small Company ­(FOSCX). Most top-performing small-cap funds are either closed to new investors and/or have attracted billions of dollars in assets, which can hurt their performance. This fund’s annualized return of 9.4% over the past 10 years ranks in the top 5% of its category. Yet it is relatively small, with just $660 million in assets. The fund invests in undervalued companies and tends to hold the stocks for long periods.

Vanguard International Dividend Appreciation ETF (VIGI), which launched last year, uses the same successful strategy as its US-stock counterpart, the Vanguard Dividend Appreciation ETF. Both funds focus on companies with long histories of raising dividends, but its foreign-stock holdings currently trade at lower valuations than US dividend-paying stocks. The fund gained 21% this year through July 31 and yielded 1.7% over the past 12 months.

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Source: Greg Carlson, a senior analyst at Morningstar Inc., ­Chicago. Morningstar.com Date: September 15, 2017
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