This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Look for Low Drawdowns in Mutual Funds

Stocks in this article: AMGN GILD BIIB

TheStreet.com Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.

NEW YORK ( TheStreet) -- As the stock market climbs the wall of worry, some investors are vowing not to look down. If you're worried about another drop, you should take the opposite approach and consider the stock mutual funds that have had the smallest drawdowns during the bear market.

A "drawdown" is a fund's biggest percentage decline, from its high to its low, in a given period. It reflects how a fund performed in the worst-case scenario. The logic is that if, in the worst of times, these funds fell less than others, they are safer.

During the three years that ended July 31, the Fidelity Select Biotech Portfolio (FBIOX) had the best drawdown, falling 32% between July 29 and Nov. 20, 2008. With heavy weightings of Amgen (AMGN - Get Report), Gilead Sciences (GILD - Get Report), Biogen Idec (BIIB - Get Report), Genzyme (GENZ), and Celgene (CELG), the fund is staging a comeback. The fund has regained more than half of its decline, and looks primed to continue its ascent.

Eight of the 10 "buy"-rated stock funds with the smallest drawdown rates target the health care and biotechnology sectors. Spending on medical care has remained constant despite the weak economy.

The Forester Value Fund (FVALX) had the top drawdown among funds not exclusively focused on health care, declining 32%. While almost 15% of the fund is invested in drug stocks, this A-plus fund also holds companies such as 3M (MMM - Get Report), Hewlett-Packard (HPQ - Get Report), AT&T (T - Get Report) and Microsoft (MSFT - Get Report).

Bullish Stock Funds with the Smallest Drawdowns
Fund (Ticker) Rating
Drawdown
Total Return 3 Years
Fidelity Select Biotech Port (FBIOX) B+
-31.5%
2.89%
Franklin Biotechnology Discovery A (FBDIX) A-
-31.7%
4.05%
BlackRock Health Sci Opp Inv A (SHSAX) A
-31.9%
4.62%
Forester Value Fd (FVALX) A+
-32.4%
1.11%
Rydex Series-Biotechnology A (RYBOX) A+
-35.7%
5.62%
Dreyfus Health Care A (DHCAX) B-
-36.3%
-0.05%
Saratoga Adv Tr-Health & Biotech A (SHPAX) A
-37.9%
1.11%
Oak Assoc-Live Oak Health Sciences (LOGSX) A
-39.1%
0.63%
Rydex Series-Consumer Products A (RYPDX) A-
-39.6%
0.01%
Rydex Series-Health Care A (RYHEX) B-
-39.7%
-2.70%
Source: TheStreet.com & Bloomberg

This review excludes market-neutral funds that hedge risk with both long and short positions, as well as funds rated less than B-minus. These funds invest at least 90% of their assets in stocks.

-- Reported by Kevin Baker in Jupiter, Fla.

Follow TheStreet.com on Twitter and become a fan on Facebook.

Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,387.21 -291.49 -1.65%
S&P 500 2,029.55 -27.54 -1.34%
NASDAQ 4,681.4970 -90.2660 -1.89%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs