Foul Weather Fund

AAA

DEFINITION of 'Foul Weather Fund'

A mutual fund that tends to perform well or better than the overall market during weak market conditions. Foul weather funds are created with downward market moves in mind where the goal of the fund is to limit or benefit from the effects of downward moves in the market.

INVESTOPEDIA EXPLAINS 'Foul Weather Fund'

While there is no set criteria of what investments a foul weather fund is made up of, they often invest in stocks with lower volatility, such as blue chip stocks, which historically hold up well during a weak market. These funds will also typically look to invest in stocks and other assets that have a strong negative or zero correlation to the stock market.

RELATED TERMS
  1. Bear

    An investor who believes that a particular security or market ...
  2. Volatility

    1. A statistical measure of the dispersion of returns for a given ...
  3. Fair Weather Fund

    A type of mutual fund that has a tendency to perform well during ...
  4. Correlation

    In the world of finance, a statistical measure of how two securities ...
  5. All Weather Fund

    A mutual fund that tends to perform reasonably well during both ...
  6. Bear Market

    A market condition in which the prices of securities are falling, ...
RELATED FAQS
  1. What can cause the rate of return to be negative?

    Several factors can cause an investment to have a negative rate of return. Poor performance of a company or companies, turmoil ... Read Full Answer >>
  2. What information should I focus on in my mutual fund's prospectus?

    The U.S. Securities and Exchange Commission (SEC) requires investment companies to provide potential and current investors ... Read Full Answer >>
  3. How can I get a free mutual fund prospectus?

    Mutual funds are sold via prospectus, as mandated by the Securities Act of 1933. The prospectus document outlines many features ... Read Full Answer >>
  4. Is there an index for tracking mid-cap stocks?

    There are several indexes for tracking mid-cap stocks. The most widely referenced is the S&P Mid-Cap 400, but others ... Read Full Answer >>
  5. What are the most popular mutual funds that invest in the automotive sector?

    There are few mutual funds that invest with a primary focus in the automotive industry, although major auto companies such ... Read Full Answer >>
  6. What information does the SEC require in an investment company's prospectus?

    A prospectus is the document provided by registered investment companies to investors that is meant to assist them in making ... Read Full Answer >>
Related Articles
  1. Mutual Funds & ETFs

    8 Fund Types To Use In A Recession

    When the economy blows up, these funds offer some protection from major losses.
  2. Active Trading Fundamentals

    Digging Deeper Into Bull And Bear Markets

    Discover why it's important to know the characteristics of the two types of market conditions.
  3. Active Trading Fundamentals

    Surviving Bear Country

    Stay calm, play dead and keep your eyes open for attractive valuations.
  4. Mutual Funds & ETFs

    Bear-Proof Your Retirement Portfolio

    Find out how to protect your assets so you can live out your dreams in style.
  5. Mutual Funds & ETFs

    Mutual Fund Basics Tutorial

    Learn about the basics - and the pitfalls - of investing in mutual funds.
  6. Mutual Funds & ETFs

    Pros & Cons Of Bond Funds Vs. Bond ETFs

    Understanding the pros and cons of bond funds and bond ETFs will help you choose the instrument that is best for building your diversified bond portfolio.
  7. Mutual Funds & ETFs

    How Janus Capital Makes Money

    Before investing in Janus, it is prudent to understand how it makes money and what costs detract from shareholder wealth.
  8. Professionals

    Mutual Funds: How Many is Too Many?

    How many mutual funds are too many when it comes to a well diversified portfolio?
  9. Investing Basics

    Understanding Redemption

    In the investing world, redemption refers to cashing out the value of bonds or mutual funds.
  10. Mutual Funds & ETFs

    How To Mimic A Hedge Fund Strategy

    Hedge fund replication strategies are beneficial to individual investors who would like hedge fund-like returns without the drawbacks.

You May Also Like

Hot Definitions
  1. Fixed-Income Arbitrage

    An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income ...
  2. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  3. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  4. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  5. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  6. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
Trading Center