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Conservative funds focusing on downside protection. Some made unpopular choices including large cash position (First Eagle and Tweedy Browne) and consumer staples stocks (Yacktman).
The funds on the list all go into the category "hold your nose and hang on" or "hold your nose and buy them." True, their near-term performance isn't pretty, and they're all equity funds, so they aren't guaranteed to not lose money in an equity-market stumble. But it's a good bet that many of them will hold up better than their peers in an uncertain market environment because their managers emphasize downside protection.
The article includes a rare concession from M* that classifications of funds can lead to misleading conclusions. That's implicit in Ms. Benz exclusion of allocation funds because "offerings [can] rate as low risk simply because they employ light equity weightings relative to their peers."
If the idea was to come up with conservative funds with downside protection, it would seem that allocation funds almost categorically fit that bill. Perhaps a screen that paired standard deviation with percentage equity could be applied to find low volatility funds (proxy for low risk) for various levels of equity exposure. That might also help to weed out equity funds that had low risk simply because they were cash heavy.
Comments
If the idea was to come up with conservative funds with downside protection, it would seem that allocation funds almost categorically fit that bill. Perhaps a screen that paired standard deviation with percentage equity could be applied to find low volatility funds (proxy for low risk) for various levels of equity exposure. That might also help to weed out equity funds that had low risk simply because they were cash heavy.