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Will Your Mutual Fund Manager Protect Your Funds in the Next Decline?

Mutual funds by design or most cases by prospectus are investment vehicle. This really means that their portfolio managers are required to remain invested regardless of market conditions. This means that any portfolio protection is really up to you, the investor. If you want your portfolio to avoid the ferocious, devastating declines like 1929-1933, 1973-1974, or 2000-2002 you're going to have to learn how to do it yourself.

When evaluating your portfolio safety and returns, the first question to ask yourself is: Are You can be a passive investor or are you an active investor?

As a general rule, mutual fund companies have forced the decision for active investors. Most managed fund companies have now placed trading restrictions on investors who manage risk in their portfolios. They claim that the defensive investor hurts the buy and hold investor with their short term trading. Extensive studies by the independent advisors groups prove exactly the opposite.

Never the less, the vast majority of funds now charge between 1 to 2% penalty charges for any trades less than 1 to 3 months and some funds are even longer. If you trade out, they often won’t let you back in. They want you to be a buy and hold investor, willing to accept the full risk of the market.

I am sorry, but that is a dangerous game in my opinion, and quite disastrous, as many investors found out the hard way in 2000-2002 when 50% of their portfolios disappeared.

Ask yourself this question:

“Did my mutual fund company protect me from the 2000 bear market?”

Most likely the answer is “No”.

If so, then it is time to take matters into your own hands!

I believe you can add significant value by managing risk, but to do that you must be actively managing risk and use funds that allow you to trade them relative to what happens in the market, not based on what’s best for the fund companies so they can continue to collect their fees.

Within our investment philosophy, we believe that blanket asset allocation increases risk and results in extremely limited long term growth. You want to invest your asset in the strongest markets and avoid those that weakening or declining. With a small amount of homework the markets will tell you the right place to be.

Learn how to avoid high risk markets and how to own the best fund in any given market condition. We offer "Safety First" based market timing signals and our proprietary Fund Targeting Matrixes to keep you in the best funds for the current market environment.