Mutual Fund Observer editor David Snowball included the Monetta Core Growth Fund (MYIFX) in his list of “20 Equity fund with the best capture ratios over the entire market cycle,” posted in Feb. 2020. Read more at Mutual Fund Observer .
Snowball titled his article “Biggest Bang for Your Buck” and explained why in his opening paragraphs: “Capture ratio is a sort of “bang for your buck” summary. … Capture ratios even the playing field for cautious and aggressive investors.”
For more on how capture ratios are calculated, and for other criteria Mutual Fund Observer used in selecting the 20 funds recognized as standouts, we encourage you to read the full article. But without delving into the details of how these ratios are captured, we’d like to offer a few comments on why these ideas are valuable.
Basically, if a mutual fund outperforms the market when the market is rising, then its “upside capture ratio” will be attractively high. And if a fund outperforms the market when the market is falling, then its “downside capture ratio” will, in contrast, be attractively low.
It can be difficult for a single strategy to achieve a high value for both these metrics over the same time period. Why? Because doing so can mean successfully playing “offense” (when the market is rising) and “defense” (when the market is falling). As with sports teams, an investment strategy may be somewhat better suited to one or the other, at least when measured over a long period of time.
With the Monetta Core Growth Fund, we do not try to time the market in the sense of trying to avoid downturns. So, in that sense, you might think we are a little more “offense” oriented. And yet, as the calculations done by Mutual Fund Observer express, we have also achieved an attractive downside capture ratio as well.
We believe some of that success during “down” markets is due to the fund’s composition: half “active” (carefully selected stocks in growing companies) and half “passive” (indexed to approximately match the return on the S&P 500 Index). During “down” markets, we believe the passive component provides investors with at least some measure of confidence that at least a portion of their portfolio will approximate the overall market’s return.
That’s important, in our view, because it can help people sleep well at night even when the market gets volatile. Remember, bear markets don’t tend to last very long, historically speaking. It’s good to have some “defense” built into a portfolio, but never lose sight of the fact that, over the long term, markets have always risen.
To learn more about the Monetta Core Growth Fund, click here.
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Capture ratio helps you to identify robustness of the mutual fund across different phases of market rally and slump. You can assess the impact of volatility on fund returns.
Mutual Fund Observer defines Annualized Percent Return (APR) as “A fund’s annualized average rate of total return each year over period evaluated. It is an abstract number, or so-called ‘geometric return,’ since actual annual returns can be well above or below the average, but annualizing greatly facilitates comparison of fund performance. APR is equivalent to CAGR, or compound annual rate of return. It reflects reinvestment of dividend and capital gain distributions, while deducting for fund expenses and fees. It excludes any sales loads.” Read more about Mutual Fund Observer’s approach to fund comparisons, including definitions, here.
Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-800-241-9772.
Diversification does not assure a profit nor protect against loss in a declining market. Periodic investment plans do not assure a profit and do not protect against loss in a declining market.
All investments, including those in mutual funds, have risks and principal loss is possible. The Funds may make short-term investments, without limitation, for defensive purposes, which investments may provide lower returns than other types of investments. The portion of the Monetta Core Growth Fund that invests in underlying ETF’s that track the Index will be subject to certain risks which are unique to tracking the Index. By investing in ETF’s, you will indirectly bear your share of any fees and expenses charged by the underlying funds, in addition to indirectly bearing the principal risks of the funds. Growth-oriented funds may under-perform when growth stocks are out of favor. Please refer to the prospectus for further details.
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Fund holdings are subject to change and are not recommendations to buy or sell any security.
The price-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current share price relative to its per-share earnings.
Past performance does not guarantee future results.
FUND DISTRIBUTOR: Quasar Distributors, LLC.