Worried about a bear market? Use our picks to play defense.
YOU DON’T HAVE TO BE SIR ISAAC NEWTON TO know that in investing, as in physics, what goes up must come down. If your portfolio is full of stock mutual funds that have launched into the stratosphere over the course of the bull market, no one would blame you for searching the sky for rapidly descending apples. The potential headache: A 50% decline in an investment requires a 100% gain just to break even.
Mutual funds can’t repeal the laws of physics. But over full market cycles, they can beat their benchmarks—even if they trail them during bull markets— by playing good defense when it counts. Below we list five funds that have stood out over the long term by losing less during down markets. The benchmark for all of the funds except Janus Small Cap Value is Standard & Poor’s 500 stock index, which lost 18.6% during the 2011 stock market correction. Returns and other data are as of April 20.
AMERICAN FUNDS WASHINGTON MUTUAL F-1 (WSHFX)
Expense ratio: 0.67%
2011 correction return: –14.9%
Eligibility rules for this fund’s portfolio are strict, rooted in fiduciary guidelines for trust accounts established in the aftermath of the Great Depression. The managers must invest at least 95% of assets in dividend paying stocks. Those companies must have paid dividends in eight of the past 10 years and funded the payout with earnings rather than with debt in four of the past five.
Denne historien er fra June 2018-utgaven av Kiplinger's Personal Finance.
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Denne historien er fra June 2018-utgaven av Kiplinger's Personal Finance.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
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