No Load Fund Investing: Are these 5 No Load Funds Worthwhile?

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MarketWatch had a feature story titled “Some managers know how to let you sleep at night,” which identified 5 no load funds that allegedly capture much of the gains in good times without suffering devastating losses in down markets.

It’s likely you have heard of most them, and I have even used some when appropriate. They are good performers, not necessarily in the top, but very solid when used at the right time. The article makes you believe that these 5 can be held without regards to market direction, which, of course is a fallacy. Additionally, some have not been around during the past bear market, so they are not necessarily battle tested.

Take a look at a long term chart:



As you can clearly see, the performance varies widely with FAIRX leading the pack. My point is that these funds could be worthy of your consideration (neither I nor my clients have currently any positions) when the market gets out of the doldrums and the trend heads back up.

However, if we are crossing into bear territory, I suggest, as I always do, that you get out of your positions and move to the safety of the sidelines (money market). The simple fact is that in a bear market all equity funds will decline, some more some less. As many have learned during the 2000 to 20003 disaster, there is no safe haven other than cash.

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