Fund Spy

A Downside Litmus Test for Funds

Russel Kinnel

You may recall that 2018 ended with a pratfall. In the fourth quarter, the S&P 500 lost 13.5%, and foreign indexes lost around 11.5%. It's been 10 years since we had a true bear market, so these little downturns are useful as tests to see if our expectations about a fund's risks are still on the money.

With that in mind, let's look at a few of the best and worst performers in the fourth quarter and what that tells us about them. And, of course, we are doing this exercise to get a glimpse into a fund's risk profile, not because we think you should select your investments based on returns in a three-month period.

Russel Kinnel has a position in the following securities mentioned above: POAGX. Find out about Morningstar's editorial policies.