3 Funds for 2026 and Beyond
Sensible investments for the long haul.
Russel Kinnel: There are plenty of reasons to worry about markets in 2026. Inflation and unemployment are on the rise, and stocks had strong returns in 2025, leaving valuations high. On top of that, we might be in a bubble for AI stocks.
Yet, bear markets are uncommon and very hard to predict, so it’s best to stay the course and keep investing. With that in mind, I chose three funds that look like good plays for 2026 and beyond. Keep in mind, though, that these are long-term investments that you ought to hold for a decade or longer.
The three funds all had rather subpar returns in 2025, but also have some defensive characteristics. So, there is a chance that they will outperform in down markets or up markets.
Quality stocks had an absolutely dismal 2025. Speculative companies roared, while companies with wide moats and robust balance sheets were left in the dust. These are good companies to own in a recession. So, I like their defensive characteristics.
3 Funds for 2026 and Beyond
Dividend-growth funds have very high-quality portfolios, and one of my favorites is Gold-rated Vanguard Dividend Growth. Wellington’s Peter Fisher seeks out companies with dominant industry positions, good balance sheets, and, of course, dividends. The fund charges just 22 basis points.
Tariffs drove the dollar down, and investors headed overseas, but Artisan International actually posted returns well below those of its peers. David Samra is an outstanding investor, so I’m very willing to bet on a rebound in this Silver-rated fund. Samra runs a concentrated portfolio, emphasizing value and quality. Despite the off year, Samra’s full record is way ahead of the MSCI EAFE, and I see the potential return to form.
Finally, I like Parnassus Core Equity. The Bronze-rated fund really emphasizes quality: A whopping 90% of the portfolio is in wide-moat stocks. The top 13 names in the portfolio all have wide moats. In fact, the top three are Microsoft MSFT, Alphabet GOOGL, and Amazon AMZN. Manager Todd Ahlsten has built a really appealing defensive portfolio here.
Watch 3 Good Funds Having a Terrible Year for more from Russel Kinnel.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
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