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Best & Worst Mutual Funds of 2012

3 funds that delivered for investors in 2012 ... and 3 that didn't

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#2 Worst Mutual Fund: Rydex Series Inverse S&P 500 Strategy Fund

YTD Return: -15%

The Rydex Series Inverse S&P 500 Strategy Fund (MUTF:RYURX) by Guggenheim is an inverse fund that aims to deliver the opposite daily performance of the S&P 500 Index.

Top 3 Holdings: N/A. This bear market fund’s strategy is to short sell equities to achieve the opposite performance of the S&P 500 index on a daily basis). RYURX uses derivatives like equity index swaps and futures contracts to bet against the S&P 500.

Manager(s): Michael Byrum is Rydex’s president and chief investment officer; he has been lead manager of RYURX since August 2001.

Takeaway: I’m a little concerned about inverse mutual funds like RYURX — particularly given FINRA’s jihad against inverse and leveraged exchange-traded funds recently. The regulator noted that inverse mutual funds could warrant a similar caution. “Funds such as these that are reset daily may present many of the same issues as leveraged and inverse ETFs, and should be subjected to a similar analysis,” FINRA said.

Expense Ratio Front Load Deferred Sales Load Min. Initial Investment Assets Under Management
1.41% N/A N/A $2,500 $167.4 million

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