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скачать книгу кеннеди дуглас жар предательства в fb2, Worried About a Market Selloff? These 10 Funds Reduce Portfolio Risk, Downside Protection: What it Means, Examples - Investopedia, CIO Key Investment Ideas: Protect against the downside - UBS, How To Diversify Your Investments And Protect Downside Risk, Downside Protection - Strategies & Techniques to Manage Risk, Downside protection; What, why, who, how and when? - Russell Investments, How Can Investors Protect Themselves from Downside Risks?.
Ivanna Hampton: Welcome to Investing Insights. I’m your host Ivanna Hampton.Stubborn inflation or the Federal Reserve’s next interest-rate move can weigh on investors’ minds. Yet, you shouldn’t let worry keep you from staying invested since the market can always find something to worry about. Instead, it could be an opportunity to shore up your portfolio with downside protection. Because there’s no telling when the next selloff might be. Russ Kinnel is the senior principal of ratings for Morningstar Research Services. I spoke with the FundInvestor newsletter editor about which funds could make good diversifiers.Thanks for being here, Russ. Russel Kinnel: Glad to be here.What Is the Downside-Capture Ratio?Hampton: Let’s start with what is the downside-capture ratio? And tell us, what does it do?Kinnel: It’s a wonky phrase, but what it means is how much of market downside a fund has captured. So, if the S&P loses 20% and a fund loses 20% at the same time, then it’s got 100% downside capture because it captured 100% of the market’s downside. If it lost more than that, it would be more than 100%. If it lost less than that, it would be less than that. And if it gained at a time when the market was correcting, going down, then it’ll actually have a negative downside capture. You don’t see that very often, but it does happen. Hampton: And that seems counterintuitive with the positive and negative numbers.Kinnel: Exactly. It’s a little confusing. But anyway, 100% means 100% of the market’s loss.Why Funds With a Low Downside-Capture Ratio Make Good DiversifiersHampton: All right. Talk about what investors should also know if they see a fund with a low downside-capture ratio.Kinnel: Right. A low downside-capture ratio tells you this might be a good diversifier, that it’s a fund that has, in the past, actually lost a lot less when the market goes down. Now, it’s not quite the same as low risk because the fact that it did well in a correction doesn’t mean it always does well, and it always has low risk. Many of them are low risk but not all. How Does a Fund’s Maximum Drawdown Line Up With Its Downside Capture?Hampton: Now in the , you researched funds' maximum drawdown, that’s looking at their biggest peak to trough loss. How does that line up with downside capture?Kinnel: Right. I did that as a reality check to illustrate that most of the time that those two things are related, but not always. So, max drawdown is how much did a fund lose from peak to trough regardless of the time? It’s not telling you about how it’s synced up with the market, but just what its downside has been, historically. And so most of the funds I highlighted with low downside capture also have low drawdowns, but not all of them. So, it’s one is low risk in sync with the market and one is just low risk. Why Savers Should Look for Low-Risk InvestmentsHampton: Let’s go through some scenarios, my favorite part. How about a fund for someone saving up for an emergency or a down payment?Kinnel: These are ones you really want low risk. And so something like a CD, a money market, or a short-term bond fund—a short-term bond fund could lose a little, but it’s not going to lose much. So, you really want to be low-risk. Let’s say you’re buying a car or a house in a couple of years, your kid’s about to go to college, you’re going to spend that money pretty soon. Don’t mess around, go low risk.Floating-Rate Funds to Protect a Bond-Heavy Portfolio Against Interest-Rate RiskHampton: What if someone has a bond-heavy portfolio, and they want to get some protection against interest-rate risk? What are a couple of options?Kinnel: What you want then is a bank-loan fund because bank loans actually adjust with the direction of interest rates. Fidelity Floating Rate and T. Rowe Price Floating Rate are two excellent floating-rate funds that, again, they adjust up. There are times when they’ll lose money because they do have some credit risk, but they are among the best options if you’re worried about interest-rate risk.More fund investment ideas. Alternative Funds for DiversificationHampton: Now, a pair of alternative funds offer diversification, but they take different approaches. Talk about the similarities and differences of the Virtus AlphaSimplex Fund and The Merger Fund .Kinnel: That’s right. So, two totally different funds, though they both have some nice diversification values. Virtus Simplex is a fund that is very complicated, and it uses models to do a lot of trend-chasing in hundreds of markets. It can go short, it can have commodities, it can have longs. And so, it’s a fund that actually had double-digit positive returns in 2020 and 2022. But on the other hand, it had a double-digit loss in 2023. So, it’s an opportunistic alternatives fund, and that means it can be a nice diversifier, but it’s not low-risk.And then Merger Fund is lower risk because what it’s doing is arbitrage. So let’s say company A announces it wants to buy company B, so they invest in company B, and they short company A, meaning if the deal goes through, they make a modest profit, and if the deal doesn’t, then they lose some money. But in any case, that arbitrage opportunity is totally unrelated to the market, and so it’s a steady but fairly low-return vehicle. Two very different vehicles.What Is Arbitrage?Hampton: Can you give a quick explanation of what arbitrage is?Kinnel: Arbitrage means you’re trying to capture one difference by going long one thing and short another thing. So, in other words, if a deal goes through, that’s going to be good for the target, but it’s going to be bad for the buyer because the buyer’s now spending all that money that people might have wanted to do something else with. So, in this case, you’re shorting the buyer and you’re long the acquisition target because let’s say a deal is announced at $20 a share, that company doesn’t necessarily go immediately to $20. It might be at $18 or $19 because of the chance it doesn’t go through. Occasionally it’ll actually go over $20 because maybe people think there’s a bidding war that’s going to happen. But anyway, generally it’s below that, and that’s where The Merger Fund steps in and says, we think this deal will close, so we’re going to buy it, but we’re going to short the other company so that we’re hedging our risk.Large-Blend Funds to Help Preserve CapitalHampton: Thank you for that. Let’s shift to some equity funds that could balance out aggressive holdings. You identified a couple of large-blend funds good for retirees or anyone looking to preserve capital. What are those funds, and how did they pull it off?Kinnel: Now we’re moving into areas where these are long equity funds. So they actually do have a lot of the market’s upside and downside. So, it’s not as much of a diversifier as the other ones we talked about, but still useful in dialing down your overall portfolio risk. One fund I like is Vanguard Global Minimum Volatility , which, as the name says, invests in lower volatility stocks. It also hedges most of the currency risk, which is a big source of volatility in global funds. Another one I like is Vanguard Dividend Growth , which, because it’s looking for dividend growers that lead it to high-quality names, and high-quality names are kind of defensive. If there’s a recession, these names tend to hold up really well. On the other hand, in a big rally like we had in 2024, they tend to lag somewhat. But again, very nice defensive characteristics with a portfolio like that.Fidelity Floating Rate High Income T. Rowe Price Floating Rate Virtus AlphaSimplex Managed Futures Strategy The Merger Fund Vanguard Global Minimum Volatility Vanguard Dividend Growth First Eagle Overseas Invesco Dividend Income Royce Small Cap Special Defensive Large-Value Funds to ConsiderHampton: And a trio of large-value funds play defense well. One of them has earned a Morningstar Medalist Rating of Gold. What makes these three funds stand out?Kinnel: They’re all defensive in nature, and they’re looking for cheap stocks but also think about absolute returns. First Eagle Overseas is a fund we’ve liked for a long time that’s defensive. They’ll buy a little gold. Invesco Dividend Income is another one. Unlike the Dividend growth fund I mentioned, this is a little more income-oriented and that makes it more of a value fund. But again, it’s done a nice job of managing the downside. The third value fund is Tweedy, Brown International Value , which is a very diversified but very disciplined value investor. So, again, that value discipline helps to reduce the risk a little bit.A Small-Value Fund That Can Serve as a Good DiversifierHampton: Any noteworthy mentions outside of large blend and large value that could serve as a good diversifier, in your opinion?Kinnel: Small value is a nice place. Especially we’ve had such a large-growth-dominated market that I like small value as a good diversifier. Returns have been unexciting lately, but still, I think they’re good diversifiers. One of my longtime favorites is Royce Small Cap Special run by Charlie Dreifus and friends. They’re real accounting mavens who really dig into the accounting to look for any issues and look for clean balance sheets, good accounting. It tends to be a very nice defensive fund.Hampton: And do you own that one?Kinnel: I do own that fund.Hampton: Got it.Kinnel: Thank you for asking. , A look at funds from Vanguard, Fidelity, and others that offer downside protection., Downside protection on an investment occurs when techniques are employed to mitigate or prevent a decrease in the value of the investment. Downside protection is a common objective for.
Investors who want to retain upside exposure but reduce downside exposure could consider replacing equity exposure with strategies that provide asymmetric return profiles, e.g., structured investments with a degree of capital protection., Two of the biggest benefits of diversification are reducing risk in your portfolio and potentially increasing returns over the long run., Managing risk is one of the most important investing topics, a big downside move can wipe out years of hard work and gains. Learn how to protect yourself., Downside protection strategies involve adjusting a portfolio’s market exposure to limit the impact of potential losses from market downturns. These strategies can be applied to different types of asset market exposures, but are most commonly focused on equity, followed by fixed income. Why should investors consider downside protection?, The best downside protection strategies depend on the deal structure. Whether investing via debt, equity, or hybrid instruments, investors have several tools to reduce exposure and safeguard their interests., Downside protection involves strategies to mitigate losses in investment value during adverse market conditions. Methods of downside protection include options trading, stop-loss orders, and diversification. Considerations for downside protection include cost, liquidity, and investment objectives..