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Stick With Conservative Equity Funds

Conservatively managed mutual funds often fail to keep pace during a strong bull market. That again has been the case during the latest run-up in stocks. The adjacent chart reveals that owning a conservative manager has almost necessarily meant trailing the S&P 500 over the past three years. Just 1% of large cap mutual funds (11 out of roughly 1,100) have outperformed the S&P 500 over that time while exhibiting less risk. Of those, two are frequently owned by Hefren-Tillotson Investment Advisory clients: Vanguard PRIMECAP Core (VPCCX) and PRIMECAP Odyssey Stock (POSKX).

It is important to evaluate a mutual fund over a full market cycle. Conservative managers can prove their worth during bear markets. Less downside risk can improve the odds of outperforming over a full cycle and increase the likelihood that an investor will stick with his or her investment program over the long run.


DISCLAIMER: Past performance does not predict future results. This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.

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