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Fund Spy

Five Mutual Funds to Help You Hedge

Is it time to buy a little mutual fund insurance?

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Now that's a rally! Things don't look so gloomy after the great spring and summer rally we enjoyed. Many say that the market is now fairly valued, so the great fire sale is over. 

The economy has improved tremendously but some people expect another slowdown. The government has to unwind its huge position in bonds, banks, insurers, and automakers. If all the stimulus works, we might have economic growth but also rising inflation. If it doesn't, we could have deflation and be stuck in a rut like Japan in the 1990s.

When stocks were supercheap and commodities superpricey, there weren't many hedges that I liked, but now it seems reasonable to consider them. Here are some funds that could hold up well if we get a bout of disappointing news.

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Russel Kinnel does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.