Markets have certainly delivered volatility lately, but have funds designed to protect investors from volatility delivered?
The answer depends on the fund, with short-term ones generally outperforming long-term ones, analysts say.
These funds, which grew in popularity after the global financial crisis in 2007-2008, apply different strategies to shield investors from heightened market volatility. Some are aimed at reacting quickly to short-term market moves, while others are geared at providing protection against sustained volatility.
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"The short-term focused products have done reasonably well," said Brook Sweeney, senior research analyst at Morningstar in Australia, referring to the recent turbulence in global financial markets triggered by expectations for an unwinding of U.S. monetary stimulus.
"The longer-term ones haven't done as well because markets have moved relatively quickly," he added. "A lot of these products were designed with 2008 in mind, with a continued period of volatility. But when there's a period of short-term volatility in the market, they aren't moving quickly enough and they get caught."
Sweeney cites the longer-term focused Invesco Balanced-Risk Allocation Fund, which invests in equities, bonds and commodities, as an example.
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It took a hit from the Federal Reserve taper talk in May and June. In the June quarter, the various share classes in the fund fell around 5.5 percent, compared with a 0.5 percent fall in Invesco's benchmark Custom Balanced Risk Allocation Index, according to data from Invesco's website.
At the end of June, the benchmark was up 10.6 percent for the previous 12 months, compared with a gain of about 2 percent in the Balanced -Risk Allocation Fund.