Actively Managed Funds with Low Volatility

Date: February 15, 2014      Publication: Bottom Line Personal      Source:  David Snowball, PhD,      Print:

As investors have sought to protect themselves from potential volatility in the stock market, a certain kind of fund has gotten lots of attention. It passively tracks an index of stocks that have tended to avoid sharp fluctuations in price. But there’s another way for stock investors to cushion themselves against volatility. Instead of investing in a fund that automatically follows an index whose list of stocks changes very little, invest in a fund whose managers actively seek out stocks and strategies that will reduce volatility. This includes ratcheting up the amount of cash in the portfolio at times when stocks seem too pricey.

Three top actively managed funds with records of low volatility…

Cook & Bynum Fund (COBYX), which launched in July 2009, has lost only 20% as much as the Standard & Poor’s 500 Index in down periods for the stock market and has gained 50% as much in up periods. Recently, veteran managers Richard Cook and J. Dowe Bynum had investments in just seven stocks, including Procter & Gamble and Coca-Cola, but had a defensive cushion of about 40% cash.


FPA Crescent (FPACX) gained an average of 8.8% over the past 10 years, better than 98% of funds in its moderate-allocation category, and it lost just 20.6% in the 2008 market meltdown, compared with a loss of 37% for the S&P 500. Recent holdings include CVS Caremark and Oracle.

Osterweis Fund (OSTFX), which gained 8.6% annually over the past decade, leans toward out-of-favor small and midsized companies that dominate their industry niches. Recent holdings include Healthsouth Corp. and movie theater operator Cinemark Holdings.

Source: David Snowball, PhD, publisher of, an investor education and mutual fund analysis Web site, Rock Island, Illinois.