DEFINITION of 'Fair Weather Fund'

A type of mutual fund that has a tendency to perform well during a bull market. In other words, it is a mutual fund that generally outperforms the market when the market is doing well, and underperforms the market when the market is doing poorly.

BREAKING DOWN 'Fair Weather Fund'

Fair weather funds are very active during bull markets. For example, mutual funds that focused on technology companies in the early stages of the tech bubble in the 1990s were very successful. To determine whether a prospective mutual fund is a fair weather fund, simply compare the fund's relative returns to the market index during both bear and bull markets.

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RELATED FAQS
  1. How Do You Find Out the Price of a Mutual Fund?

    The easiest way to find out the price of a mutual fund is to look at its net asset value (NAV). Read Answer >>
  2. Can You Place a Stop-Loss Order on a Mutual Fund?

    Limit orders and stop-loss orders do not apply to the trading of mutual fund shares. Read Answer >>
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