Investing Insights

Worried About a Market Sell-Off? These 10 Funds Reduce Portfolio Risk

19 snips
Mar 14, 2025
Guest
Russ Kinnel
Russ Kinnel, a senior principal of ratings at Morningstar Research Services, shares his expertise on fund analysis and portfolio diversification. He discusses the importance of the downside capture ratio for mitigating risks during market sell-offs. Kinnel highlights safe investment options, such as low-risk funds and bank loan funds to combat interest-rate fluctuations. He also explores unique strategies like arbitrage and emphasizes the significance of diversification, especially for risk-averse investors.
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INSIGHT

Downside Capture Ratio

  • Downside capture ratio measures how much a fund loses during market downturns.
  • A ratio of 100 means the fund mirrored the market's loss.
ADVICE

Low Downside Capture Funds

  • Look for funds with low downside capture ratios to diversify your portfolio.
  • These funds tend to lose less during market corrections, offering potential stability.
ADVICE

Short-Term Savings

  • Use low-risk investments like CDs, money markets, or short-term bond funds for short-term savings.
  • These are suitable for down payments or college funds due to their stability.
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