Fair Weather Fund
Categories: Mutual Funds, Managed Funds
Some dogs are all weather dogs: sitting outside, surveying the land through rain, snow, or sunshine. But other dogs...like some funds...are fair weather only.
A fair weather fund is a type of mutual fund that keeps on giving during bull markets. In other words: mutual funds that do better-than-average when the whole market is doing well, and do worse-than-average when the whole market is feeling blue.
Because fair weather funds do badly when the market is doing badly, it means they’re not likely to have staple stocks; i.e. things you still need in a recession, like food. Fair weather funds are likely to have riskier, cutting-edge stocks, like tech-and-startup-focused stocks. If you want your mutual fund to do all right when the sad-bear comes to the market, maybe look for an all weather fund to cut your losses. But if you’re willing to take the risk and aren’t going to be liquifying anytime soon, then fair weather funds might be okay. Just be sure to sit on them and not sell when they’re low.