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Best Funds for Riding Out a Bear Market


When the stock market goes ballistic, as it has in recent weeks, many investors panic…and sell. Here’s a better idea: Don’t sell. Instead, keep some skin in the game and cushion your portfolio with funds that hold up in inhospitable markets.

It’s all part of a win-by-losing-less strategy. “You get rich by keeping what you have and not losing it,” says Adam Patti, founder and CEO of IndexIQ, a firm that specializes in ETFs that track alternative strategies. “It’s about preserving capital and getting nice, consistent returns over time.”

The eight mutual funds and exchange-traded funds we picked generally won’t beat the stock market during a period of strongly advancing share prices, but they should hold up better in downturns. Each of the funds fared better than Standard & Poor’s 500-stock index during the 2007-09 bear market (during which the S&P 500 plunged 55.3%) and during the past two corrections when the market lost more than 10% (the index lost 18.6% during a five-month stretch of 2011 and 12.4% from May 21 through August 25, 2015).

Unless otherwise mentioned, returns are through September 11, 2015; returns for the 2007-09 bear market are cumulative. Funds are listed alphabetically.

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