By Charles Lynn Bolin

I like Will Rogers’ quote, “Don’t gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don’t go up, don’t buy it.” A good friend of mine once said that a balanced portfolio will usually have funds that are losing money. Then there are the unusual years like 2022 when few categories other than money market funds, short-term bonds, and commodities had positive returns. This article looks at how Vanguard Global Wellesley Income Fund (VGWIX) may fit into the portfolio of a timid investor, or how WisdomTree Dynamic Currency Hedged International Equity Fund (DDWM) might fit into the portfolio of a somewhat less timid investor.

With all of this market turmoil and uncertainty, we can reduce anxiety by getting out and doing the things we enjoy. Smell the roses. This baby Gold Finch was enjoying the sunshine in our yard and the bird seed that we set out. Turn off the news and go for a walk.

On the investing side, we can develop long-term plans and stick to them. A well-balanced portfolio within our risk tolerance can help reduce anxiety.

I am searching for sustainable simplicity.

As I review investments of family and friends, I am asked why do I (we) own this fund if it’s losing? In the past, someone told me that they sold all equities before the Great Financial Crisis, but they never got back in, and I showed how much more they would have had if they had just stayed in. Investors should increase their financial literacy and understand their risk tolerance.

The psychology of investing is that the fear of losing is often greater than the satisfaction of gaining. Inflation is a stealthy thief. People see their ultra-conservative investments gaining, but don’t see the loss of purchasing power. I take this into account when assisting family and friends with investments. They sometimes want to make more money, but sell the dips and miss the upswings. I recommend using financial advisors to develop a long-term plan and stick with it.

International equities are outperforming domestic stocks lately, partly because valuations are very high in the US. Some analysts cite tariffs as disproportionately impacting the US. When I explain this to timid investors, they ask if they should buy international stocks. My answer is no, because they don’t like to see the value of their accounts or funds go down.

For the less timid investor who can handle that some holdings will go down while others are up, I like the WisdomTree Dynamic Currency Hedged International Equity Fund (DDWM). It is classified by MFO as a Great Owl Fund for consistently being in the top quintile of International Multi-Cap Value funds for risk-adjusted returns. I selected it from all international equity funds for its high risk-adjusted performance.

For the ultra-conservative, timid investor who does not like to see big losses among their funds, I suggest mixed asset funds with global exposure. I have assisted some of them in the past to own the Vanguard Wellesley Income Fund (VWINX/VWIAX), and it is often one of their favorites. VWINX has 13% exposure to international investments.

My advice for some timid investors to get more exposure to international equities is to consider switching to the Vanguard Global Wellesley Income Fund (VGWIX), which has a 52% exposure to international investments. The Global Wellesley fund has outperformed its counterpart for the past five years with slightly less risk. Both have about 37% allocated to stocks. I also like VGWIX, in part, because its valuation is much lower than VWINX. Both of these funds are classified as Mixed-Asset Target Allocation Conservative.

Table #1: High Performing International Equity and Global Mixed Asset Funds – 7 Years

Figure #1 shows that the performance of the Vanguard Global Wellesley Income Fund (VGWIX) has been very close to that of Vanguard Wellesley Income Fund (VWINX) for the past seven years. The return of WisdomTree Dynamic Currency Hedged International Equity Fund (DDWM) has been slightly higher than Dimensional International Value ETF (DFIV), but with less downside risk.

Figure #1: High Performing International Equity and Global Mixed Asset Funds – 7 Years

Figure #2 shows that the performance of the Vanguard Global Wellesley Income and Vanguard Wellesley Income has been almost identical for the past three years. Likewise, the performance of WisdomTree Dynamic Currency Hedged International Equity ETF and Dimensional International Value ETF is also similar.

Figure #2: High Performing International Equity and Global Mixed Asset Funds – 3 Years

Year to date as of April, Dimensional International Value ETF (DFIV) is outperforming WisdomTree Dynamic Currency Hedged International Equity Fund (DDWM). The Vanguard Global Wellesley Income is outperforming Vanguard Wellesley Income.

Figure #3: High Performing International Equity and Global Mixed Asset Funds – YTD

Closing

I extracted all mixed asset funds with 40% or less allocated to stocks, above average risk-adjusted performance, and average or better annual percent returns. I narrowed the list to those with at least 20% invested internationally. Vanguard Global Wellesley Income Fund (VGWIX) is about the only fund to make the list of sixteen funds besides Mixed-Asset Target Funds with a target date of 2025 or earlier, and Mixed-Asset Target Today funds. So, the timid investor who wants to get international exposure should look at Vanguard Global Wellesley Income Fund (VGWIX).

By Don Glickstein

I love baseball and personal finance, but I barely understand baseball’s sabermetrics and finance analytics. I want a good story.

The stat guys despise the Tampa Bay Rays’ Chandler Simpson because he only has a single tool: speed. The one home run he’s hit in his entire career was inside the park. This is a guy who can barely hit a ball out of the infield. I love him because he’s a unicorn. He has a story to tell: 112 stolen bases last year in the minors. For those of you who don’t know baseball, that’s a good number.

Likewise, my eyes spin around in my head when I look at Ulcer Indices, Martin ratios, EBITDA, and Bollinger Bands. I don’t have a clue why anyone would want to look at a logarithmic scale when they can view a linear scale with true proportions. Anyone who thinks they can predict the future by looking at past performance using charts strikes me as one step below alchemists.

So when crunch time comes for whatever reason, I want to hear what David Snowball says, or Warren Buffett, or Morningstar human analysts (its AI analyses are useless), or any of my mutual fund managers.

Crunch time came last year on the wings of inflation, and this year on the barge across the River Styx to the Tariff Hades. I wanted to evaluate my funds to see which had cash in reserve and how they had performed as inflation grew.

I didn’t want to change my allocation from the traditional (and arbitrary) 60 percent stocks and 40 percent bonds. I don’t panic easily, and keeping 60–40 makes it easier to buy low and sell high when I rebalance my portfolio.

Rather than drowning in incomprehensible metrics, I decided to focus on four simple questions that any investor can understand and evaluate.

• Does the fund keep cash reserves for defense and opportunities?
• How did it handle the recent inflationary period?
• What’s its downside protection when markets tumble?
• And perhaps most importantly—do the managers tell a rational story about their strategy and actually talk to shareholders like human beings?

These four criteria guided me through a systematic review of my entire portfolio, from large-cap growth to small-cap value to bond funds.

I started my analysis with Parnassus Core Equity (PRBLX, PRILX), a wonderful, large-cap fund that I’ve owned since 2002.  It also screens companies for social responsibility. (Needless to say, it avoided Enron, among others.) Its lead manager, Todd Ahlsten, writes informative reports; talks with the media frequently; has occasional shareholder conference calls; and answers questions personally, despite the fund being relatively large (due in no small part to its good performance over the years). Its downside capture over the past five years is 73, and Morningstar gives it a Gold rating.

Still, I was concerned that it’s a fund that always stays fully invested, and its top holdings were (as of March 2025), Microsoft, Amazon, NVIDIA, and Alphabet. With 32 percent of its portfolio in tech, I had concerns.

I can’t imagine ever selling my entire position in the fund, but it was time to do some rebalancing into a large-company fund that counterweighted Parnassus.

MFO gave me a lead: Marshfield Concentrated Opportunity (MRFOX). It was sitting on 28 percent cash in March, with no holdings in tech. One of three managers had a unicorn background: a Yale Law School degree, and she worked for a now-senator whom I respect from my home state of Massachusetts, Ed Markey. Another manager went the Warren Buffett route: an MBA from Columbia. Of course, resumes do not a fund manager make. I was impressed with Marshfield’s investing philosophy, the managers’ commentaries, and yes, its downside capture was just 51. Over three and five years, Morningstar rates it as low risk, high return. In fact, it’s never had a losing calendar year.

So I now own both Parnassus and Marshfield as my large-cap funds.

But what about a small-company fund? I had owned Neuberger Berman Genesis (NBGNX) for almost as long as I owned Parnassus. It had served me well because its managers didn’t gamble: They invest in smaller companies that actually have real products and real profits. It never made as much money in bull markets, but it lost a lot less in bear markets.

It was always fully invested in equities. As inflation and tariff chaos came on, I wondered if there was a small-cap fund that might lose even less and keep a cash reserve. I found the fund in a boutique family where I already owned two funds: FPA Crescent (FPACX), which is an MFO favorite, and FPA Flexible Income (FPFIX), which attracted me because of its relatively short duration (to simplify: a measure of when bonds come due) and its goal to beat inflation over rolling three-year periods.

The new small-cap fund was FPA Queens Road Small Cap Value (QRSVX). However, before I convinced myself to sell out of Neuberger, I had questions. While its performance was equivalent to Neuberger, and its downside capture was less, unlike other FPA funds, Queens Road appeared to have just one manager, and, of equal concern, that manager worked for a subadvisor. In other words, it’s a contractual arrangement.

That raised alarms because a former FPA fund, International Value, was purchased by a third-party company, and within a year, the fund divorced its new owner and closed. (MFO’s article about it here)

So I wanted to hear from the horse’s mouth about the arrangement that Queens Road has with FPA, and what happens if the manager can’t continue? I sent an email to both FPA and the subadvisor asking that whoever opened it forward it to Steven Scruggs, the manager. It took a couple of weeks to get a response, but yes, Steve replied, answered my questions, and offered to talk with me on the phone. (And yes, he now has someone on the investment team he believes could one day become a co-manager, and relations with FPA are great.)

I sold Neuberger and made Queens Road my core small-cap fund, which also has a 10 percent cash position.

Finally, in addition to the FPA Flexible Income bond fund, I had a position in what I called my super-conservative junk-bond fund, BrandywineGlobal Corporate Credit (BCAAX). It began its life as Diamond Hill Corporate Credit, owned by a smallish company based in Ohio. In 2021, it sold the fund to the behemoth multinational Franklin Templeton fund-devouring monster. While the managers continued to run the fund well, their shareholder communications became thinner and thinner.

I moved that money to the even more conservative junk-bond fund, CrossingBridge Low Duration High Income (CBLVX, CBLVX). To be fair, the manager doesn’t consider his fund to be junk, and Morningstar classifies it as a multisector bond. However, in March, 60 percent of its portfolio was below investment grade or unrated. Of greater importance to me was the duration: far shorter than Brandywine, so it would have greater flexibility to deal with the chaos economy.

Again, I had some questions about how the manager, David Sherman, works with his team, and I emailed CrossingBridge. He replied quickly. Soon after my investment, I connected to his quarterly video conference call. He managed to speak to my low level while giving more details to those who are much smarter than I am.

Bottom Line: Since making these portfolio tweaks, the market has climbed higher rather than crashed (as of mid-May, as I write). My new funds haven’t necessarily outperformed my old ones on the upside—and that’s the point. I’m not trying to hit home runs anymore; I’m playing for consistent base hits and stolen bases, just like Chandler Simpson. I can’t predict whether we’ll face layoff chain reactions, persistent inflation, crushing consumer debt, or economic retaliation from former allies seeking independence. But I know my fund managers have cash to deploy, proven downside protection, and the communication skills to explain what they’re doing when the chaos arrives.

Postscript: Downside capture ratios and my funds

How do I measure downside protection? I look at a statistic so simple even I can understand it: Downside capture, which is a ratio of how much a fund loses in bad markets compared with its asset-category index (aka benchmark). If the market plummets by 50 percent, a fund with a downside capture of 100 also drops by 50 percent. But if the fund’s downside capture is zero, it hasn’t lost any money. This is important because the less money you lose, the easier it is to recover. If I lose half of my $100 investment, I have $50. To get back up to $100, my investment would need to increase by 100 percent. That’s tough, and even with good funds, it could take years to get back to even.

		Fund downside cap vs. the S&P 500 & rating		US Bond downside cap & rating
		1.5 years	Since launch	1.5 years	Since launch	MFO rating	Fund Age (yrs)
FPA Crescent	Flexible Portfolio	42	54	8	-23	5	32
Marshfield Concentrated Opportunity	Multi-Cap Growth	70	67			5	9
Parnassus Core Equity	Equity Income	107	74			5	33
Neuberger Berman Genesis	Small-Cap Growth	202	87			5	37
FPA Queens Road Small Cap Value	Small-Cap Core	138	87			5	23
FPA Flexible Fixed Income	Multi-Sector Income			26	11	5	6
BrandywineGLOBAL – Corporate Credit	High Yield			-14	37	3	23
CrossingBridge Low Duration High Income	Multi-Sector Income			-30	-20	5	7

How do you read that table? Easy!

After each fund’s name, we identify its Lipper peer group and then share its downside capture for two different periods. Columns 3 and 4 are the downside capture relative to the stock market over the past 18 months, which I identify as a high-inflation period, and since the fund’s launch. Columns 5 and 6 report the same information relative to the bond market’s movements. The last column tells you how long it’s been around; obviously, a fund with 30+ years of history might carry a bit more weight in your mind than a fund with six or seven years. For numbers people, we include the actual downside capture (8 means a fund captured 8% of the market’s decline, -11 means a fund rose when the market declined). For the rest of us, we color-code the box: blue is best, green is good, yellow is average, orange is below average, and red (none on my chart!) is the basement.

We only identify the downside capture relative to the asset class in which a fund invests: stock funds versus the S&P 500, income funds against the bond aggregate, and FPA Crescent against both because it invests in both.

As a bonus, we included two other risk-return measures for you. If a fund’s name is in a blue box (FPA Crescent, for instance), that signals that MFO designates it as a “Great Owl” fund for having achieved top 20% risk-adjusted returns for the past 3-, 5- 10-, and 15-year periods. The MFO Rating ranks a fund’s performance based on risk-adjusted return, specifically Martin Ratio, relative to other funds in the same investment category over the same evaluation period. The same color-coding applies: blue is top 20%, green is good, and so on.

By Charles Lynn Bolin

I created my best laid plans of mice and men for retirement, or as Dwight D. Eisenhower said, “plans are worthless, but planning is indispensable”. I follow much of what Christine Benz recommends in How to Retire: 20 Lessons for a Happy, Successful, and Wealthy Retirement. I divide my intermediate investment bucket, consisting of Traditional IRAs, into conservative sub-portfolios of bonds that I manage and more aggressive sub-portfolios of stocks and bonds managed by Fidelity and Vanguard for growth and income. In this article, I look at managing withdrawals in a secular bear market with an elevated sequence of return risk.

This Time Is Different, Incredibly Different

Keynesian macroeconomic theory is to use government intervention to manage economic downturns and promote employment. The law of supply and demand means American consumers will spend less as tariffs are passed along in the form of price increases. Tariffs are a regressive tax on lower- and middle-income households. A broad measure of the dollar has declined by eight percent year-to-date, making imports even more expensive. Cutting Federal tax revenue more than spending adds to deficits and is financed with higher national debt. Businesses don’t like uncertainty, and those that don’t pass along the cost of tariffs will have lower profits, which pressures high valuations. This time is incredibly different!

I wrote Investing in 2025 and the Coming Decade for the Mutual Fund Observer December 2024 newsletter. Fidelity’s Asset Allocation Research Team (AART) described “a new environment of slower growth, increasing geopolitical risk, and declining globalization”. This was before tariffs were increased in April and before abrupt cuts to the Federal workforce and spending! I displayed Figure #1 below, which I created from Vanguard Perspective (October 22, 2024), to represent projected 10-year nominal returns and volatility. Investing in international equities and bonds helped investors with well-diversified portfolios sail through the 2025 correction with low volatility.

Figure #1: Vanguard VCMM 10-Year Return vs Volatility Projections

Uncertainty in retirement planning has greatly increased. Last month, while the stock market had recovered, I reduced my overall allocation of stocks to bonds from about 57% to around 50%. For a candid assessment of the risks, I refer you to “JPMorgan CEO Jamie Dimon Says Markets Are Too Complacent On Tariffs, Expects S&P 500 Earnings Growth To Collapse,” by Hugh Son at CNBC. To be clear, I favor a balanced budget in a well-thought-out manner over time. Uncertainty, whether strategic or not, will have lingering adverse effects.

Paolo Confino wrote, “As the Fed devises its new strategy, Powell sees an economy with ‘more volatile’ inflation,” for Fortune. Mr. Confino quotes Federal Reserve Chairman Jerome Powell as saying, “We may be entering a period of more frequent and potentially more persistent supply shocks, a difficult challenge for the economy and for central banks.” Mr. Powell continued, “Higher real rates may also reflect the possibility that inflation could be more volatile going forward than during the inter-crisis period of the 2010s.” Mr. Powell concludes, “Anchored expectations played a key role in facilitating these expansions. More recently, without that anchor, it would not have been possible to achieve a roughly five percentage point disinflation without a spike in unemployment.”

Lance Roberts at Real Investment Advice explains in “Earnings Revision Shows Sharp Decline” that earnings “estimates are exceedingly optimistic”. He suggested “rebalancing risk as necessary and adjusting portfolio holdings to provide some hedge against a sudden pickup in volatility”. Mr. Roberts points out that “as the economy slows, consumer demand falls”. One implication is that as the economy slows, tax revenues will slow, worsening the deficit and adding to the national debt.

Current Investment Environment

I watched “2025 Economy Watch,” by The Conference Board, and “Navigating Markets through a Shifting Sea of Policy” at Fidelity. They articulated my concerns for the economy very clearly. In Table #1, I compare the timely forecast from The Conference Board to the First Quarter 2025 Survey of Professional Forecasters by the Federal Reserve Bank of Philadelphia, which was made before the April 2^nd announcement of tariffs. Economists at The Conference Board estimate that economic growth will probably slow to below 2% this year and next, and inflation will remain elevated near 3%.

Table #1: Forecasts of Real GDP and Inflation

The government bond sale this week was not met with enthusiastic investors, and the yield on 30-year Treasuries has risen from 4.4% following the April 2^nd announcement of tariffs to over 5%. The 10-year Treasury has risen from 4.0% to nearly 4.6% during the same time as investors seek higher yields to compensate for inflation and uncertainty. The S&P 500 fell 1.6% that day.

Walmart recently announced that it would have to raise prices to offset tariffs. Walmart’s net operating profit margin is around 3%, and it depends on inventory turnover. They have little choice but to raise prices for consumers because of the cost of tariffs.

The recent GOP budget proposal is estimated to cost over $3T over ten years. “New Report: Rising National Debt Will Cause Significant Damage to the U.S. Economy” by the Peter G. Peterson Foundation, describes a study that estimates that the current path of growing national debt will, in the coming decades, reduce the size of the economy, the number of jobs, private investment, and wages. Moody’s became the last of the three major rating firms to lower the rating of US government debt, citing high deficits and rising interest costs.

Bonds For Conservative and Aggressive Buckets

I extracted performance data for the past five years of 723 bond and money market funds using MFO Premium fund screener and Lipper global dataset for all Fund Families loosely excluding those with performance ratings in the bottom quintile, those with less than $5B in assets under management, and those with fewer than five bond funds. The results are in Table #2. The data is color-coded with best as blue and worst as red. The worst-performing bond categories of the past four years became the best-performing of 2025 as of the time of this writing. I expect short-term interest rates to fall at the end of the year and long-term interest rates to rise, and tilt away from core bonds to those with shorter durations and inflation-protected bonds.

Table #2: Lipper Bond Category Performance by Year

Table #3 lists the Lipper Categories sorted by the highest returns to the lowest for 2021 to 2025, plus for the past four years. Funds in the Lipper Category below the dark red line had negative returns for the time period. The blue and gray shaded Categories were the most consistent high performers and suitable for a conservative fixed income portfolio. Those in the reddish and yellowish cells were less consistent and/or worse performers over the past four years. When inflation is high and long-term rates are rising, bonds with longer durations don’t perform well.

Table #3: Lipper Bond Category Performance by Year

Figure #2 shows the Annualized Percent Return (APR) for the past four years versus Downside Deviation. Those in the blue rectangle are the Lipper Categories that I would put in a conservative intermediate bucket sub-portfolio. Those in the orange shape are the more volatile Lipper Categories that may be suitable for a more aggressive intermediate bucket sub-portfolio.

Figure #2: Lipper Bond Category APR Versus Downside Deviation

Table #4 contains funds in the Lipper Categories for conservative bond portfolios as of mid-May. Yields for municipal bond funds are adjusted to the tax equivalent yield for an investor taxed at 22%. Bonds with shorter duration and inflation-protected bonds are trending higher.

Table #4: Author’s Ranking System of Conservative Bond Categories

Target Allocation (Stocks to Bonds)

Now that I have been in retirement for three years, I have a firm handle on expenses and guaranteed income, and updated my lifetime financial plan. My life expectancy is fifteen years plus or minus, well, fifteen years. At the short end of that range, I need to be concerned about “Sequence of Return” risk, and at the long end of the range, I need to be concerned about longevity risk.

To estimate the sensitivity of changing my target stock to bond allocation, I downloaded all of the mixed asset funds with a thirty-year history and created a regression trendline comparing allocation of equity to the annualized percent return (APR) and rolling minimum (worst) three-, five-, and ten-year returns. Table #5 represents performance versus allocation. Changing my stock to bond allocation target from 60% to 50% does not have a major impact on outcomes. The data also shows that over the worst ten-year period, returns may not beat inflation.

Table #5: Estimated Risk Sensitivity to Stock Allocation – Past Thirty Years

% Equity	APR	Rolling APR Minimum
		3 Year	5 Year	10-Year
Core Bond	4.4	-5.6	-0.9	0.8
10	5.1	-2.8	0.0	2.6
20	5.6	-4.1	-0.6	2.3
30	6.1	-5.4	-1.1	1.9
40	6.6	-6.8	-1.7	1.6
50	7.1	-8.1	-2.2	1.3
60	7.6	-9.4	-2.8	1.0
70	8.1	-10.7	-3.4	0.7
80	8.6	-12.0	-3.9	0.3
Multi-Cap	9.1	-18.4	-7.9	-2.5

Source: Author Using MFO Premium fund screener and Lipper global dataset.

“A Lifetime Investment Approach in a Single Strategy,” by Fidelity, describes two important concepts about retirement planning, which are age at retirement and current age, which impact the time in retirement that one has to have income. For someone who is 70 and in retirement for several years, the chart estimates that a typical investor may want a stock-to-bond ratio between 40% and 50%. A financial plan and risk tolerance should be used to determine the target allocation to stocks and bonds.

Fidelity Market Sense provides a good summary of the highest and lowest returns for one- and five-year time periods over approximately one hundred years. My overall target allocation was set up for “Growth and Income,” which is a traditional 60% stock/40% bond portfolio. The average return is 8.56% with a minimum (worst) one-year return of -47% and a rolling minimum five-year return of -8.26%. I compared this to the “Balanced” target portfolio, which had an average long-term annualized return of 7.98% with a rolling minimum one-year return on -40.64%. My life expectancy is much less than one hundred years, so I build in a margin of safety.

I used the Fidelity Retirement planner to simulate end-of-plan assets and income for 25 years for different asset allocations. The Fidelity Retirement Planner recommended that I maintain my current allocation of close to 60% stocks. The opportunity cost of lowering my target allocation from 60% to 50% in below-average market conditions is that the end of plan assets will be about 6% lower. During average market conditions, the difference between the two portfolios is larger.

Withdrawal Strategy

Figure #3 is a comparison of an intermediate term investment bucket #2 consisting of Traditional IRAs with $1,00,000 in it and a $40,000 annual (4%) withdrawal from 1997 to 2025. The link to Portfolio Visualizer is provided here. The portfolio balance and withdrawals are adjusted for inflation. For this exercise, one-third of the stock allocation is in international stocks.

Notice that the 100% bond portfolio had low drawdowns but did not keep up with inflation. Performance worsened starting in 2012, largely because Quantitative Easing and easy monetary policy suppressed yields. Yields are likely to be higher in the coming decade in order to finance the rising national debt. The 50% stock/50% bond portfolio kept up with inflation; however, one has to have the tolerance for the high volatility. The 25% stock/75% bond is a compromise to minimize drawdown but with some growth. During 2022, both stocks and bonds did poorly. Flexible withdrawal strategies based on market conditions can improve outcomes, and in the case of Traditional IRAs with RMDs, withdrawals in excess of spending needs can be reinvested in after-tax accounts.

Figure #3: Portfolio Performance Including Withdrawals Adjusted For Inflation

My Strategy

We are overweight in Traditional IRAs. I switched as soon as ROTH 401ks became available and made ROTH conversions after retirement. We are accelerating withdrawals and reinvesting the excess over spending needs in tax-efficient after-tax accounts in order to reduce long-term taxes and leave an inheritance in a tax-efficient manner.

I want to make the conservative sub-portfolios that I manage last the rest of our lives. Over the past year, I converted the conservative sub-portfolios that I manage to 100% short-term bonds and bonds ladders and set up automatic withdrawals from an aggressive managed IRA sub-portfolio to an after-tax account for longer-term goals. I also lowered my overall target allocation for less downside risk. As interest rates rise, I will look for opportunities to extend the duration in bond ladders.

At Vanguard, withdrawals may be automated to withdraw from a fund. In managed accounts, Vanguard rebalances when the portfolio is out of its allocation tolerance ranges. At Fidelity, withdrawals can be automated for self-managed IRA accounts, and Fidelity sells eligible funds to cover the withdrawal.

I am considering setting up a Separately Managed Account in the future for short-duration bonds that Fidelity manages for a fee of 0.35%–0.40% with a minimum investment of $350,000. I’m taking one small step at a time.

Closing

We have been helping family and friends with hospice, moving to nursing homes, finding assisted/independent living facilities, updating wills and durable powers of attorney, and financial planning. I volunteer over twenty hours a week to repay society for the wonderful opportunities that I have experienced in my life and to help people in a variety of circumstances. As a cancer survivor, I am aware that best-laid plans of mice and men may not come to fruition and that plans are worthless, but planning is indispensable. I search for sustainable simplicity in this uncertain environment.

By David Snowball

It was a great and horrifying story about two young boys and the arrival of the Cooger and Dark Carnival in Green Town, Illinois. If you entered the carnival grounds late at night, you might be drawn to its iconic ride, Cooger & Dark’s Pandemonium Shadow Show. It’s a story about the ways in which evil can be a powerful temptation to even the best of people. Some of the lines are maddeningly good.

A stranger is shot in the street, you hardly move to help. But if, half an hour before, you spent just ten minutes with the fellow and knew a little about him and his family, you might just jump in front of his killer and try to stop it. Really knowing is good. Not knowing, or refusing to know is bad, or amoral, at least. You can’t act if you don’t know.

Others half-haunt me.

Oh, what strange wonderful clocks women are. They nest in Time. They make the flesh that holds fast and binds eternity. They live inside the gift, know power, accept, and need not mention it. Why speak of time when you are Time, and shape the universal moments, as they pass, into warmth and action? How men envy and often hate these warm clocks, these wives, who know they will live forever.

Bradbury declared it his most “delicious” story.

The title is also an homage to the witches of Macbeth (Act 4, Scene 1, following “boil and trouble”):

2nd Witch:

By the pricking of my thumbs,

Something wicked this way comes. [Knocking]

Open locks,

Whoever knocks!

[Enter Macbeth]

I admit to having been thinking of dark circuses and evil clowns rather a lot lately. They make it hard to pick up the newspaper most mornings. Chief Justice Warren got it, too: “I always turn to the sports section first. The sports section records man’s accomplishments; the front page has nothing but man’s failures” (Sports Illustrated, July 22, 1968).

For readers of the Mutual Fund Observer, two coming circuses will be particularly pressing.

The explosion of single-stock and leveraged single-stock ETFs.

Single-stock exchange-traded funds (ETFs) and leveraged single-stock ETFs are relatively new and complex investment products that have garnered significant attention from both investors and researchers. I was struck by the utter flood of new fund registrations in the first weeks of May, which might signal a July or August. Launch.

In the middle of 2024, there were about 100 such funds globally. The first in the US seems to have been AXS Tesla and AXS NVIDIA, both launched in 2022. Trading volume and AUM data are scant. Morningstar did report a doubling in the pool’s AUM in the first quarter of 2024.

What do they do? In general, they do not own the single stock in question. They own derivatives tied to the performance of the stock, but they are generally tied to one day’s performance: if Tesla drops 25% tomorrow, an inverse-leveraged TSLA ETF will drop by 25%, or 50%, or 75% in a day. The extent of the drop depends on the extent of the leverage provided. The same is true in the other direction.

Two ugly realities:

1. Returns are sequence-dependent. TSLA might fall 25% then rise 25% in consecutive days. A TSLA ETF might show a two-day loss of 6.25% because the fall eroded the share’s value on day one, reducing the impact of day two’s rise. A 2x Bull TSLA would show a loss of 25% in the same two days. A 3X Bull TSLA would be down 56%. The phenomenon is called “compounding decay due to path dependency.”
2. The cost of the derivatives and management fees create a huge drag. Per Morningstar, the average leveraged single-stock ETF charges 1.07%, about three times as much as the average ETF overall. Those expenses mean you never get the pure performance of the stock.

In general, these are toys for speculators. They are not investment products. Sadly, investors fall for marketing and overestimate their own abilities. They think they’ll track that 3X DraftKings ETF and move like a ballerina. Or, frankly, more likely, like Dumbo.

In general, academic and professional research reach the same conclusion. If you’re a professional with vast tracking resources and a holding period of one day or less, these are fine tools. If you aren’t a professional and don’t intend to monitor hour-by-hour for the rest of your adult life, run away.

Morningstar’s take:

Single-stock ETFs can meet the needs of a few. High-conviction traders with a single-day or shorter holding period may find them useful vehicles to express their views. After all, it’s hard for everyday investors to use leverage or construct their own covered calls.

But the fact is that these products are rarely sensible for everyday investors. They are flawed, costly, and liable to take more from investors than they give. (Ryan Jackson, “For Most Investors, Single-Stock ETFs Are Best Left Alone,” Morningstar.com, 4/9/2024)

Which, of course, means that we’re being flooded with them. Here’s a sampling of the 485A prospectus filings that MFO came across during just two weeks in May 2025:

GraniteShares 2x Long ABNB Daily ETF	Airbnb, Inc.
GraniteShares 2x Long APP Daily ETF	AppLovin Corporation
GraniteShares 2x Long BULL Daily ETF	Webull Corporation
GraniteShares 2x Long CEG Daily ETF	Constellation Energy Corporation
GraniteShares 2x Long COST Daily ETF	Costco Wholesale Corporation
GraniteShares 2x Long CRWV Daily ETF	CoreWeave, Inc.
GraniteShares 2x Long CVNA Daily ETF	Carvana Co.
GraniteShares 2x Long ETOR Daily ETF	eToro Group Ltd.
GraniteShares 2x Long FSLR Daily ETF	First Solar, Inc.
GraniteShares 2x Long GLXY Daily ETF	Galaxy Digital Inc.
GraniteShares 2x Long HIMS Daily ETF	Hims & Hers Health, Inc.
GraniteShares 2x Long ISRG Daily ETF	Intuitive Surgical, Inc.
GraniteShares 2x Long KO Daily ETF	The Coca-Cola Company
GraniteShares 2x Long MCD Daily ETF	McDonald’s Corporation
GraniteShares 2x Long MELI Daily ETF	MercadoLibre, Inc.
GraniteShares 2x Long NBIS Daily ETF	Nebius Group N.V.
GraniteShares 2x Long NKE Daily ETF	NIKE, Inc.
GraniteShares 2x Long OKLO Daily ETF	Oklo Inc.
GraniteShares 2x Long PM Daily ETF	Philip Morris International Inc.
GraniteShares 2x Long RGTI Daily ETF	Rigetti Computing, Inc.
GraniteShares 2x Long SBUX Daily ETF	Starbucks Corporation
GraniteShares 2x Long SNAP Daily ETF	Snap Inc.
GraniteShares 2x Long SPOT Daily ETF	Spotify Technology S.A.
GraniteShares 2x Long UNH Daily ETF	UnitedHealth Group Incorporated
GraniteShares 2x Long WMT Daily ETF	Walmart Inc.
Leverage Shares 2X Long ABNB Daily ETF	Airbnb, Inc.
Leverage Shares 2X Long AFRM Daily ETF	Affirm Holdings, Inc.
Leverage Shares 2X Long BBAI Daily ETF	BigBear.ai Holdings, Inc.
Leverage Shares 2X Long BYDDY Daily ETF	BYD Company ADR
Leverage Shares 2X Long COST Daily ETF	Costco Wholesale Corporation
Leverage Shares 2X Long FUTU Daily ETF	Futu Holdings Limited
Leverage Shares 2X Long GOLD Daily ETF	Gold
Leverage Shares 2X Long HIMS Daily ETF	Hims & Hers Health, Inc.
Leverage Shares 2X Long JD Daily ETF	JD.com, Inc.
Leverage Shares 2X Long NEM Daily ETF	Newmont Corporation
Leverage Shares 2X Long OKLO Daily ETF	Oklo Inc.
Leverage Shares 2X Long PDD Daily ETF	PDD Holdings Inc.
Leverage Shares 2X Long RGTI Daily ETF	Rigetti Computing, Inc.
Leverage Shares 2X Long RKLB Daily ETF	Rocket Lab Corporation
Leverage Shares 2X Long SOUN Daily ETF	SoundHound AI, Inc.
Leverage Shares 2X Long UNH Daily ETF	UnitedHealth Group Incorporated
Leverage Shares 2X Long VST Daily ETF	Vistra Corp.
Roundhill 2X Long VIX Futures Points ETF	Volatility Index
Roundhill 2X Short VIX Futures Points ETF	Volatility Index
Roundhill Long VIX Futures Points ETF	Volatility Index
Roundhill Short VIX Futures Points ETF	Volatility Index
Tradr 2X Long ASTS Daily ETF	AST SpaceMobile, Inc.
Tradr 2X Long CEG Daily ETF	Constellation Energy Corporation
Tradr 2X Long CEP Daily ETF	Cantor Equity Partners, Inc.
Tradr 2X Long CRWV Daily ETF	CoreWeave, Inc.
Tradr 2X Long DDOG Daily ETF	Datadog, Inc.
Tradr 2X Long GEV Daily ETF	GE Vernova Inc.
Tradr 2X Long ISRG Daily ETF	Intuitive Surgical, Inc.
Tradr 2X Long LRCX Daily ETF	Lam Research Corporation
Tradr 2X Long NET Daily ETF	Cloudflare, Inc.
Tradr 2X Long SMR Daily ETF	NuScale Power Corporation
T-REX 2X Long ACHR Daily Target ETF	Archer Aviation Inc.
T-REX 2X Long AFRM Daily Target ETF	Affirm Holdings, Inc.
T-REX 2X Long AUR Daily Target ETF	Aurora Innovation, Inc.
T-REX 2X Long AVAV Daily Target ETF	AeroVironment, Inc.
T-REX 2X Long AXON Daily Target ETF	Axon Enterprise, Inc.
T-REX 2X Long BBAI Daily Target ETF	BigBear.ai Holdings, Inc.
T-REX 2X Long BKNG Daily Target ETF	Booking Holdings Inc.
T-REX 2X Long BULL Daily Target ETF	Webull Corporation
T-REX 2X Long CEG Daily Target ETF	Constellation Energy Corporation
T-REX 2X Long CRWV Daily Target ETF	CoreWeave, Inc.
T-REX 2X Long CVNA Daily Target ETF	Carvana Co.
T-REX 2X Long DDOG Daily Target ETF	Datadog, Inc.
T-REX 2X Long DKNG Daily Target ETF	DraftKings Inc.
T-REX 2X Long DNA Daily Target ETF	Ginkgo Bioworks Holdings, Inc.
T-REX 2X Long DUOL Daily Target ETF	Duolingo, Inc.
T-REX 2X Long GEV Daily Target ETF	GE Vernova Inc.
T-REX 2X Long GLXY Daily Target ETF	Galaxy Digital Inc.
T-REX 2X Long GOLD Daily Target ETF	Gold
T-REX 2X Long HHH Daily Target ETF	Howard Hughes Holdings Inc.
T-REX 2X Long KTOS Daily Target ETF	Kratos Defense & Security Solutions, Inc.
T-REX 2X Long OKLO Daily Target ETF	Oklo Inc.
T-REX 2X Long QUBT Daily Target ETF	Quantum Computing Inc.
T-REX 2X Long RXRX Daily Target ETF	Recursion Pharmaceuticals, Inc.
T-REX 2X Long SMLR Daily Target ETF	Semler Scientific, Inc.
T-REX 2X Long SMR Daily Target ETF	NuScale Power Corporation
T-REX 2X Long SOUN Daily Target ETF	SoundHound AI, Inc.
T-REX 2X Long TEM Daily Target ETF	Tempus AI, Inc.
T-REX 2X Long TTD Daily Target ETF	The Trade Desk, Inc.
T-REX 2X Long UPST Daily Target ETF	Upstart Holdings, Inc.
T-REX 2X Long UPXI Daily Target ETF	Upexi, Inc.
T-REX 2X Long WGS Daily Target ETF	GeneDx Holdings Corp.
T-REX 2X Long XXI Daily Target ETF	Twenty One
Tradr 2X Long SMR Daily ETF	NuScale Power Corporation

More specialized new games include:

1. Bitwise Bitcoin Option Income Strategy ETF
2. Bitwise BITQ Option Income Strategy ETF
3. Bitwise Ethereum Option Income Strategy ETF
4. Defiance Enhanced Long Vol ETF
5. Defiance Enhanced Short Vol ETF
6. Defiance Vol Carry Hedged ETF
7. Tuttle Capital 1x Inverse Volatility ETF
8. Tuttle Capital 2x Inverse Volatility ETF

The arrival of cryptocurrency in retirement plan portfolios

On May 28, 2025, Mr. Trump’s Department of Labor rescinded a 2022 policy urging “extreme caution” about including cryptocurrency in retirement plans. The official announcement read:

The U.S. Department of Labor’s Employee Benefits Security Administration has rescinded a 2022 compliance release that previously discouraged fiduciaries from including cryptocurrency options in 401(k) retirement plans.

The 2022 guidance directed plan fiduciaries to exercise “extreme care” before adding cryptocurrency to investment menus. This language deviated from the requirements of the Employee Retirement Income Security Act and marked a departure from the department’s historically neutral, principled-based approach to fiduciary investment decisions. 

“The Biden administration’s department of labor made a choice to put their thumb on the scale,” said U.S. Secretary of Labor Lori Chavez-DeRemer. “We’re rolling back this overreach and making it clear that investment decisions should be made by fiduciaries, not D.C. bureaucrats.”

One might pause at the breathtaking hypocrisy disguised as policy guidance. If we’re talking about crypto, beloved by Elon & co., the rule is “investment decisions should be made by fiduciaries, not D.C. bureaucrats.” If we’re talking about the option of socially-responsible investments in the same accounts, the rule reverses, and the government must surely make financial decisions rather than trusting fiduciaries.

It’s a policy that marries the mendacious with the disastrous, a rare accomplishment.

The proposed inclusion of cryptocurrencies in employer retirement plan options raises significant concerns about investor protection, particularly given the extreme volatility and risk characteristics these digital assets exhibit.

The cryptocurrency market has experienced substantial growth in trading activity, with the top exchanges processing trillions in volume annually. According to current market data, there are literally millions of cryptocurrencies in circulation (really, you could make your own this afternoon since there are no regulations and no barriers to entry). The total cryptocurrency market capitalization fell 18.6% in Q1 2025 to close at $2.8 trillion, after briefly touching $3.8 trillion in January. This dramatic swing within a single quarter exemplifies the type of volatility that could devastate retirement portfolios, particularly for investors nearing or in retirement who have limited time to recover from significant losses. Consider, for example, the drawdown periods for the oldest and most liquid coin, Bitcoin.

Remember, this is just the downside. There are lunatic price spikes the rest of the time. The point here is to help you get a big picture of how deep the knife plunges (the red drawdowns) and how long the wound lasts (the gray “ramps” shows months to recovery).

Below are the five-year risk-return metrics for the two largest cryptocurrencies, which we assume are the two most likely to infiltrate a retirement plan.

	Annual Return	Maximum Drawdown	Standard Deviation	Best Year Return	Worst Year Return	Ulcer Index
Bitcoin (BTC)	51%	-73%	65.6%	+303% (2020)	-64% (2022)	36.2
Ethereum (ETH)	61%	-79%	91.2%	+420 (2020)	-68% (2022)	~40

Sources: Lazy Portfolio ETF (for Bitcoin), Portfolio Labs ETH-USD, and S&P Ethereum Index

The data reveals several alarming characteristics that underscore the inappropriateness of these investments for retirement accounts. Bitcoin, despite being the most established cryptocurrency, has experienced maximum drawdowns exceeding 70%, meaning investors could lose more than 70% of their investment. The recovery period for Bitcoin’s maximum drawdown required 19 months, during which retirement investors would face sustained and severe portfolio losses.

Ethereum presents even more extreme risk characteristics, with a maximum five-year drawdown of nearly 79% (and a near-complete meltdown in 2018) The current Ethereum drawdown stands at 45.29%, that is, at the end of May 2025, an Ether is worth 45% less than it was at its November 2021 peak. For retirement investors, such sustained periods of substantial losses could prove financially catastrophic, particularly for those requiring portfolio withdrawals during retirement.

The smaller cryptocurrencies are worse.

Retirement investors require stable, predictable growth that preserves capital while generating reasonable returns over long time horizons. The documented maximum drawdowns approaching 95-96% for major cryptocurrencies represent existential threats to the retirement security of elderly investors. The extreme volatility documented in this analysis represents not an investment opportunity but rather a fundamental threat to retirement system stability and individual financial security.

Bottom Line

These decisions, government and corporate, continue to move the markets in the direction of a casino. Investors’ conviction that “patience is for losers” just makes them losers. Buy quality stocks from experienced managers. Diversify away from assets that depend on Washington acting like adults. Find managers who manage volatility thoughtfully. We list them!

What’s an investor to do?  Learn from the experience of others. When you suspect something wicked is around, do not go alone into the basement with a flickering light. When you suspect something wicked this way comes, do not wander off on your own – away from the security of friends – “to see what made that noise.”

“Acting without knowing takes you right off the cliff.” ― Ray Bradbury, Something Wicked This Way Comes (1962)

An MFO Bonus Feature: What Investors Can Learn from Teen Slasher Flicks!

How to Die in a Teen Slasher Flick	How to Lose All Your Money
Split Up – “Let’s cover more ground!” (Spoiler: you just covered your grave.)	Go All-In – “Let’s 3X leverage this!” (Spoiler: you just leveraged your bankruptcy.)
Ignore the Weird Local – “He’s just being dramatic.” (He’s also always right.)	Ignore the Boring Expert – “They don’t understand innovation!” (They do. You just don’t like what they say.)
Investigate That Noise – “Is someone there?” (Yes. With a machete.)	Chase the Hype – “Everyone’s talking about this token!” (Just before it vanishes.)
Drop the Weapon – “Oh, thank god, it’s just you!” (It’s not.)	Sell the Winner, Hold the Loser – “It’ll come back eventually.” (It won’t. Ever.)
Say You’ll Be Right Back – (You won’t. Ever.)	Say You’ve Got a Gut Feeling – (Your gut also told you Taco Bell was a good idea.)
Trust the Cop – He’s either dead, possessed, or useless. Possibly all three.	Trust the Finfluencer – She’s not your friend. She’s your exit liquidity.
Go Into the Basement – No exit, no lights, no hope.	YOLO Into Retirement Crypto – No floor, no plan, no future.