Please stay tuned for important disclosure information at the conclusion of this episode.

Welcome to Investing Insights. I'm your host, Ivana Hampton. Stubber inflation or the Federal

Reserve's next interest rate move can weigh on investors' minds, yet you shouldn't let worry keep you

from staying invested since the market can always find something to worry about. Instead, it could be

an opportunity to shore up your portfolio with downside protection, because there's no telling

when the next sell-off might be.

Russ Kennell is the senior principal of ratings for Morningstar Research Services.

I spoke with the fund investor newsletter editor about which funds make good diversifiers.

Thanks for being here, Russ.

Glad to be here.

Well, let's start with what is the downside capture ratio and tell us what does it do?

Yeah, it's kind of a wonky phrase, but what it means is how much of market downside a fund is

captured. So if the S&P loses 20% and a fund loses 20% at the same time, then it's got

100% downside capture because it captured 100% of the market's

downside.

If it captured, if it lost more than that, it would be more than 100% if it lost less than

that, it would be less than that.

And if it actually gained at a time when the market was correcting going down, then it

would actually have a negative downside capture.

You don't see that very often, but it does happen.

And that seems counterintuitive with the positive and negative numbers.

Exactly. It's a little confusing, but anyway, 100% means 100% of the market's loss.

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