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Fund Spy

Rising Betas at Some Funds Could Indicate New Risk

Beta isn't a perfect measure of risk, but investors spooked by recent market volatility may want to pay closer attention.

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This article previously appeared in  Morningstar FundInvestor.

Even two years after the end of the most recent and destructive bear market (2007–09), investors are skittish about equities. Proof of that can be found in fund-flow trends during the past several years--bond funds have been raking it in while stock funds have seen redemptions.

Regardless of the attractive valuations that bear market may have left in its wake and the market's healthy rebound in 2009, investors' anxiety is understandable. Both 2010 and 2011 have seen their share of bumps. Most recently, the S&P 500 Index dropped 5.43% in August 2011--a month that included one of the craziest weeks in recent history following S&P's U.S. debt downgrade and that ended up being the worst monthly performance since last spring.

Bridget B. Hughes does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.