All market rallies must one day end, but what's really been shocking in this downturn is the extent of losses in certain investments that were considered downright safe or that supposedly had a tight leash on risk. For example, the ultrashort-bond category, previously regarded as a safe-haven, cash-substitute investment, produced some severe blowups.
SSgA Yield Plus (which liquidated in June) and Fidelity Ultra-Short Bond (FUSFX, FUSFX); (FUSFX, FUSFX), for instance, suffered losses on a scale that would've been unthinkable based on their own or the category's past record. Regions Morgan Keegan Select High Income (MKHIX, MKHIX); (MKHIX, MKHIX), a high-yield bond fund, is another prominent example.
While that fund is in a risky category that is not foreign to sharp losses, veteran manager Jim Kelsoe had a stellar record in controlling downside. Over the last 12 months, however, the fund has posted a staggering loss of nearly 79%.
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