None of these are bad but they need to be understood and followed closely. Additionally it is crucial to spend the time understanding what the fund can and cannot do to change exposures and the process behind portfolio changes.
A fund that can make narrow bets on a specific outcome with a large percentage of assets lends itself to being very right or very wrong. Very wrong in a bull market for everything else is probably not a big deal but during a decline like this, then it is unfortunate.
Gold has taken a beating from a sentiment standpoint for how poorly it has performed for the last few years. Throughout, I noted that it was doing exactly what investors should hope; looking nothing like the equity market which created the reasonable expectation of not looking like equities in a downturn and that is how it has played out over the last month as the S&P 500 is down mid-single digits and gold is up mid-single digits. It is not a perfect, negative correlation but has helped.
The bigger context with a post like this has always been to try to soften the blow of a large decline not completely miss it (completely missing it would be more about luck than strategy). I continue to be a believer in this approach as a little bit can go a long way to reduce the extent to which the portfolio trades in line with the broad market.
This article was written by Roger Nusbaum, AdvisorShares ETF Strategist.