Funds that make money in down markets are hard to find
If you had invested in the Nasdaq or a Nasdaq index fund two years ago and held that position until today, your return would be zero. There have been substantial up and down moves during that period, but the net result is that you would have no more money today than you had to start with.
That is not the type of result one wants from an investment. The problem is what can an investor do when the markets are in a downturn? I’ve pointed out numerous times in recent weeks that very few economic sectors are progressing right now. That makes it difficult for investors to avoid losing money, let alone to generate any profits.
Several fund companies introduced short funds to provide a profit alternative to investors in bear markets. But many of these funds do not provide the true inverse relationship they try to achieve. And because short funds can be quite volatile, it is difficult for many investors to make good decisions about when to buy and when to sell.
On the chart below, the Nasdaq is shown as a gold line. Notice that it dropped more than 20% from its high point. Last summer Strategis Financial Group switched many client accounts to bonds (blue line). Bonds have performed very well since then and are up about 10%. But in recent weeks even bonds have moved to a sideways pattern.
The black line on this chart is a mutual fund called Permanent Portfolio and it is one of the holdings in our Foundation strategy. The fund invests a fixed target percentage of its assets in the following investment categories: gold, silver, Swiss franc assets, dollar assets like treasury securities and short term corporate bonds, etc. It is listed in the conservative category by Morningstar and is a five-star ranked fund over one, three, five and 10-year periods.
This is one of a very small number of funds that has not seen a significant pullback during this latest correction. It has continued to advance even as bonds have moved sideways in recent sessions. The fund has been managed by Michael J. Cuggino since 1991.
If you are looking for a low risk fund for an IRA or other investment portfolio, this is one you might want to consider.
F.S.
If you would like investment strategies that attempt to minimize risk but still provide the opportunity for solid growth, check out the offerings from Strategis Financial Group. For information, call 800-279-3377.
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