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Fund Spy: Morningstar Medalist Edition

Reversal of Fortune: Cautious Medalists Shine

Market volatility upends performance rankings.

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Market volatility can prompt big shifts in funds' Morningstar Category rankings, especially over the short term. While that may not matter much for investors who pick good funds and sit tight for the long haul, it can cause others to panic and make hasty decisions. One key to keeping calm is understanding your funds' risk profiles. Funds that court risk relative to peers tend to do poorly in volatile markets, while the steady-Eddies tend to hold up better.

Christine Benz's recent column "A Third-Quarter Mutual Fund Scorecard" reviewed how Morningstar Medalists fared in the late summer's wobbly markets. Here, we take a closer look at four U.S. equity fund medalists--two category ascenders and two descenders. In retrospect, each fund performed in line with expectations.

Alec Lucas has a position in the following securities mentioned above: VDIGX. Find out about Morningstar’s editorial policies.