Stock funds face mounting challenges in 2019, ranging from rising interest rates and ­unresolved trade wars to a slowdown in global economic growth and heightened market volatility.

Despite those challenges, top fund picker Janet M. Brown says the following 10 no-load stock funds and exchange-traded funds (ETFs) are positioned to do well. They are her picks for the 10 most attractive stock funds for 2019…

Aggressive Funds

For investors who can handle sharp ups and downs, these not-very-diversified funds have the potential for some of the strongest gains in 2019. Consider putting up to 5% of your stock portfolio in one or more of these funds depending on your particular investment goals and risk tolerance.

SPDR S&P Retail ETF (XRT) tracks the 95 stocks of specialty retailers in the S&P Retail Select Industry Index. This ETF returned nearly three times as much as the Standard & Poor’s 500 stock index over the past year through mid-November, and consumer spending should remain strong because shoppers have extra cash now thanks to low unemployment, tax cuts and wage growth. Also supporting the retail sector: Inflation should remain moderate. Performance: 7.5% (one-year) and 19.1% (10-year).*

Baron Opportunity (BIOPX) holds 50 or so fast-growing, innovative companies of all sizes that are reshaping entire industries. The fund has been 35% more volatile than the S&P 500, but its performance has been outstanding throughout the bull market, ranking in the top 13% of its category over the past decade. Performance: 21.1% (one-year), 17.4% (10-year).

Fidelity Select Health Care Services (FSHCX) invests in large health-care companies, including equipment ­makers and biotech and pharmaceutical firms. Health-care stocks currently have more attractive valuations than technology and consumer discretionary stocks, and even if the economy stumbles, health-care spending is expected to rise 5.5% in 2019. Performance: 26.9% (one-year) and 21% (10-year). ­

Kinetics Paradigm (WWNPX) searches for misunderstood or underappreciated companies of all sizes whose sectors have substantial barriers to entry (meaning that it’s unusually difficult for potential new competitors to enter the business). As the economy accelerates, many of the fund’s holdings that it bought cheaply years ago are starting to pay off. Example: Texas Pacific Land Trust, which collects royalties from leasing its oil-rich land and benefits from higher oil prices. Performance: 7.7% (one-year) and 13.6% (10-year).

Core Funds

If you are comfortable with funds that are about as volatile as the broad market, consider core diversified funds that tend to invest in high-quality companies that, taken together, are less speculative than the portfolios of the aggressive funds above. Many investors could reasonably place the majority of their stock allocations in these funds.

Amana Growth (AMAGX) is ­benefiting financially from the fact that it is managed in accordance with core principles of Islam, meaning that it avoids stocks related to such things as alcohol and gambling, insurance and any business that carries large amounts of debt. The majority of the nearly 35-stock portfolio has been in technology and health-care companies, with strong cash flow and low levels of debt—so they may be better positioned for rising interest rates. Performance: 11.3% (one-year) and 14% (10-year).

Polen Growth (POLRX). This fund is even more concentrated than the ­Amana fund, investing in the stocks of about 20 large-cap companies in the US, all of which have had outstanding profitability and double-digit earnings growth. Since its 2010 inception, the fund has averaged a 13.8% annual return, better than both the S&P 500 and the Dow Jones Industrial Average, with only slightly higher volatility. Performance: 15.9% (one-year).

SPDR Dow Jones Industrial Average ETF (DIA). Unlike the two actively managed funds above, this ETF passively tracks the Dow, an index of just 30 large-cap US companies. Investors may want to consider this fund rather than an ETF that tracks the other popular broad-market index, the S&P 500. Reason: The Dow has outperformed the S&P 500 over the past year because it weights its holdings by their share prices, which has led to considerable concentration and greater exposure to industrials, technology and consumer stocks, all sectors likely to keep doing well in 2019. Performance: 7.4% (one-year) and 14% (10-year).

Vanguard Dividend Appreciation ETF (VIG) isn’t your typical dividend-oriented fund filled with slow-growth utility stocks that tend to struggle in rising interest rate environments. The fund tracks the Nasdaq US Dividend Achievers Select Index, which includes about 200 highly profitable companies, typically industrials, that are growing fast enough to have increased their dividend payments for at least 10 consecutive years. The ETF’s yield was recently only 2.1%, but you’re not buying it for income. Its dividend-growth strategy offers a combination of relative safety and capital-appreciation opportunity. Performance: 8.8% (one-year) and 12.9% (10-year).

Conservative Funds

If the prospect of market pullbacks makes you uncomfortable, asset-­allocation funds can smooth out the volatility because they mix stocks and bonds in their portfolios and have the flexibility to shift their allocations.

Janus Henderson Balanced ­(JABAX). Unlike many “balanced” funds, this fund can change its allocation between stocks and bonds sharply depending on market conditions. It has had good timing in the past. The managers decreased the fund’s stock exposure ahead of the 2008 declines and increased it again in 2009. It recently had 60% in US large-cap stocks, particularly technology names, and about 40% in US Treasuries and other government bonds. Performance: 6.4% (one-year) and 10.6% (10-year). ­

Vanguard Wellesley Income (VWINX). For very conservative stock investors worried about wild swings in the markets in 2019, this fund has provided decent, low-volatility returns for nearly 50 years. Recently, it had about 35% of assets in mega-cap blue chips such as JPMorgan Chase & Co. and Johnson & Johnson and the rest of the portfolio in high-quality government and corporate bonds. Performance: 0.6% (one-year) and 8.6% (10-year).

*All performance figures, including one-year and 10-year annualized returns, are from Morningstar Inc., and are through November 30, 2018, unless otherwise noted.

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