Most mutual funds stick to a certain strategy. It might have to do with the asset class, i.e. a tech stock fund, or a U.S. Treasury Bond fund, etc. Or it might have to do with a particular outlook for the economy. Bull funds are meant to make money when things are going well; bear funds are meant to make money with things are in the toilet.
In general, these funds just do what they do. As an investor, you're supposed to figure out what you think is going to happen and then pick which of these funds will do well in that environment. Think real estate is ready to take off? Buy a fund based on real estate investment trusts. Think the euro is ready to tank? Buy into a euro bear fund.
But if you aren't too sure what's going to happen, then an all weather fund might be the choice for you. This category of mutual fund seeks to see at least acceptable returns no matter what goes on in the overall economy.
In some ways, this goal is something of a splitting-the-baby-type proposition. It's not really possible to create a strategy that's equally effective in all environments. If there was a fund manager who figured out how to make money in every economic situation, that person would eventually just end up owning everything. We'd be living in the United States of Warren Buffett or whatever.
Instead, the all weather funds just look to stay flexible. Unlike other funds, which tie themselves to a certain strategy or asset class, all weather funds have a broad variety of asset types that they invest in. They try to stay diversified and move funds around as needed to anticipate and respond to economic changes. The point is that, as an investor, it takes the pressure off you to try to read the tea leaves of the economy, because the all weather guys are taking steps to do it for you. It's a "set it and forget it" type of fund.
Related or Semi-related Video
Finance: What is Capital Appreciation (M...10411 Views
Finance a la shmoop what is capital appreciation as in the sense of an
investment fund or a mutual fund you know that is like what does it mean to
have a mutual fund with a focus on capital appreciation all right people
think more, more assets all right you have capital and yes you [Woman with a vault full of money]
appreciate having that capital but you'd appreciate it more if there was more of
it like it appreciated so a capital appreciation fund is one which focuses
on just growing the assets bigger and bigger don't really care how the capital
gets grown don't necessarily need dividends don't necessarily need minimum
p/e ratios don't necessarily need balance sheet covenants on the
investments you make don't care if it's exposed to the Venezuelan oil companies [Venezuela city landscape]
or the Australian dollar in a cap app fund well you just want the dough to [Money falls into flower pot]
grow and this ethos is in contrast to other flavors of funds which for example
need to throw off cash in the form of dividends like in a growth and income
fund or interest like in a bond fund like you know it's cash people need to
live on right so those have to do a capital appreciation does not so what's
a typical investment in a capital appreciation fund well usually be
something like a mega trend tech stock that just grows or appreciates with time [Man typing on laptop]
and really doesn't throw off much if any of a dividend like Amazon, Netflix
Facebook, Google those guys so think of a capital appreciation fund is the body [Man wearing underpants in a locker room]
builder of the mutual fund world it just wants to grow everywhere
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