III. Funds That Make Money in Up or Down Markets

Are you tired of trying to figure out which way this wild and crazy market is headed next? You wouldn’t care if you could stick with funds that did well whether the market moved up or down.

In theory, that should be easy. There are dozens of funds that claim to be market neutral. They follow strategies intended to generate positive returns in any market, up or down. Alas, making that happen is harder than it looks. In fact, excluding bond funds, a category that outperformed stock funds in recent years until late 2010, only one market neutral fund recorded a positive return in 2008, the year that the market tanked big time.