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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Performance

FundNAV$ Change
MONTX24.55-0.09
MYIFX24.57-0.11
as of 9/29/2020 | View Performance

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Important Information

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.”