Take Your Funds' April 14 Performance as a Sign of Future Risk
Now you see it. Now you don't.
In today's market time, where 10 minutes seem to bring what 10 years used to, last week's rout is likely little more than a distant memory.
Don't forget so soon. Believe it or not, that red-flashing ticker handed you more than a scare and a stomachache. Not only did it offer a valuable (if unwelcome) reminder that there are no guarantees on Wall Street, the selloff also gives a black-and-white (or green-and-red) picture of an investment's potential future risk.
Oh yes, we could rely on the often incomprehensible -- and almost always imperfect -- measures like beta and alpha to try to figure that out. But let's be honest: When was the last time you looked at those numbers before buying?A far better way of getting a sense of your investment's riskiness is an answer to this question: How does it perform in a correction, or even a crash? What happens when the markets go down, not up? It's been a while since we could ask that question. You have to go back to the last quarter of 1998. And times may be different now. Then, the bull just took a breather, and within two months, was running full-speed ahead. And that was with the help of the Fed slicing interest rates. Few expect Alan Greenspan & Co. to be so accommodating today. But if you want to predict the pulse of your fund or stock during down times, you may have trouble. Don't expect your fund firm to trumpet how it performed during April's storm. And the major rating companies generally offer results measured in round quarters or years. So here's a list worth keeping -- from the market high of March 10 through last Friday's free fall, these are the best among the biggies -- that is, among the funds you likely hold.
|Best of the Bigs
Large funds that fared the best between March 10 and last Friday.
|Fund||March 10- April 14 Return||April 14 Return||1-Year Return|
|(AWSHX) Washington Mutual Investors||8.7%||-4.7%||-6.2|
|(AIVSX) Investment Co. of America||-0.1||-4.4||6.2|
|(FGRIX) Fidelity Growth & Income||-2||-5.3||-2.7|
|(VFINX) Vanguard 500 Index||-2.7||-5.8||3.4|
|(FMAGX) Fidelity Magellan||-6.5||-5.9||4.1|
|(FCNTX) Fidelity Contrafund||-11.3||-5.3||-1.6|
|(TWCUX) American Century Ultra Inv||-11.8||-7.3||-1.5|
|(AGTHX) Growth Fund of America||-13.5||-5.9||34.5|
|(JAVLX) Janus Twenty||-18.0||-5.8||12.6|
A couple of things to note: When you're looking at past returns, 1999 is ancient history. Much more revealing are trailing one-year returns, which tell you a whole lot more because they include both faces of this Jekyll and Hyde market. Check out how the market mayhem ate away at your gains. I did a double-take when I saw (JAVLX) Janus Twenty's one-year number -- a meager 12.6%, compared with 1999 calendar-year returns of nearly 65%. Same goes for (JANSX) Janus fund -- one-year trailing returns of 16% compared with 1999's 47%. Both of these aggressive, tech-taut funds fell quite a bit when compared with their peers. Janus Twenty went from the top 10% of large growth funds in 1999 to the bottom half of the category for the past 12 months. See these previous stories for lists of the
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