Following a chemical attack in Douma near the Syrian capital Damascus that claimed around 60 lives, Trump conducted military strikes in Syria, with support from France’s president Emmanuel Macron and Britain’s prime minister Theresa May.
After the attack, Russia warned the United States of retaliatory actions. In this context, mutual funds that are capable of offering favorable returns and bear a lower level of risk might be prudent investment options. In order to identify low-risk mutual funds, we have used Sharpe ratio, which is used to measure a fund’s risk-adjusted returns.
What Happened in Douma?
On Apr 7, Douma, a rebel-held western Syrian city near Damascus witnessed a serious attack when chemical bombs were dropped on the region. Following the attack, around 60 people including women and children lost their lives, while more than 1,000 were injured. President Trump slammed this attack, calling its “heinous” and “atrocious” and said that the United States has “a lot of options militarily” to answer to this.
Last April, Syria’s Shayrat airbase, which acted as a launch pad for a poisonous gas attack on the city of Khan Sheikoun, was attacked and neutralized by the United States. During the weekend, Trump government along with allies, the U.K. and Germany conducted military actions against president Assad-led Syria. President Trump tweeted “Mission Accomplished” after United States carried out the missile strike.
Russia Condemned U.S. Military Attack
Meanwhile, one of Syria’s allies, Russia condemned this military attack and said that the country felt “threatened” by the U.S. In fact, Anatoly Antonov, Russia's ambassador to the U.S., said that “a pre-designed scenario is being implemented,” and warned that this kind of action “will not be left without consequences.” Additionally, Russian President Vladimir Putin tagged this an “act of aggression” and called for an emergency meeting of the UN Security Council to discuss the attack.
In the emergency UN Security Council meeting on Apr 14, U.N. Ambassador Nikki Haley said that “if the Syrian regime uses this poisonous gas again,” the United States will give a similar kind of reply. In the meeting, Haley held Russia responsible for covering up the recent chemical attack on Douma. Moreover, she signaled that the United States might place new sanctions on Russia on Apr 16, following the Putin-led country’s continuous support to the Syrian administration.
How to Identify Low-Risk Funds?
Before selecting funds, it is important to identify appropriate indicators that can effectively measure the risk level of a fund. This is why we have used Sharpe ratio to screen low-risk mutual funds. Sharpe ratio generally measures a fund’s average returns relative to the level of volatility experienced by the same. Further, Sharpe ratio indicates how much extra returns one can derive from a portfolio by taking on additional risk.
This means that the higher the Sharpe ratio, the more attractive the fund will be among risk-averse investors. Now, most investors believe that mutual funds with a Sharpe ratio higher than 1 are lucrative. (Read: 4 Top-Ranked Mutual Funds with a Good Sharpe Ratio)
5 Best Low-Risk Funds in Focus
We have selected five mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy) and have a three-year Sharpe ratio greater than 1. Moreover, these funds have impressive one-year annualized returns. They also have minimum initial investment within $5000 and low expense ratios.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual. Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.
MassMutual Select Blue Chip Growth R5 (MBCSX - Free Report) invests a large chunk of its assets in common stocks of both large- and mid-cap blue-chip companies that have above-average earnings growth potential. MBCSX seeks appreciation of capital for the long run.
The fund has one-year annualized returns of 27.7% and an expense ratio of 0.75% as compared with the category average of 1.27%. MBCSX had a Sharpe ratio of 1.17 in the last three years and a Zacks Rank #1.
Vanguard High Dividend Yield Index Investor (VHDYX - Free Report) seeks to track the performance of a benchmark index that measures investment returns of common stocks of companies that are characterized by high dividend yield. VHDYX employs an indexing investment approach designed to track the performance of the FTSE High Dividend Yield Index, which consists of common stocks of companies that pay above-average dividends.
The fund has one-year annualized returns of 9.4% and an expense ratio of 0.15% as compared with the category average of 0.60%. VHDYX’s Sharpe ratio is 1.01 for the last three yearsand it carries Zacks Rank #1.
T. Rowe Price Blue Chip Growth (TRBCX - Free Report) seeks capital appreciation for the long run by investing heavily in common stocks of large as well as mid-cap blue-chip companies. The fund focuses on companies that have good financial fundamentals, a seasoned management and strong market positions.
The fund has one-year annualized returns of 30.7% and an expense ratio of 0.72% as compared with the category average of 1.27%. TRBCX had a Sharpe ratio of 1.16 in the last three years and a Zacks Rank #1.
Fidelity Select Technology Fund (FSPTX - Free Report) seeks capital appreciation. Normally, FSPTX invests at least 80% of the assets in common stocks of companies principally engaged in offering, using, or developing products, processes, or services that will provide or will benefit significantly from technological advances and improvements.
The fund has one-year annualized returns of 34.8% and an expense ratio of 0.77% as compared with the category average of 1.38%. The Sharpe ratio for FSPTX is 1.45 for the last three years. The fund carries a Zacks Rank #1.
Franklin Growth Advisor (FCGAX - Free Report) significantly invests in equity securities of companies that are big holdings in their respective industries. The fund invests in equity securities, including common stocks of domestic mid- and large-cap companies. It may also invest around one-fourth of its assets in small-cap companies.
The fund has one-year annualized returns of 19.7% and an expense ratio of 0.62% as compared with the category average of 1.27%. FCGAX had a Sharpe ratio of 1.15 in the last three years and a Zacks Rank #2.
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