When selecting funds from SMI's Recommended Funds page, our standard advice for Upgraders is to choose the highest-ranked fund available at your brokerage — irrespective of the fund’s “relative-risk” score.

We approach it this way because we’ve seen how our Upgrading system does a good job of balancing risk and reward over the long-term. That “balancing act” is related in part to how Upgrading moves us into more volatile funds when risk-taking is being rewarded by rising stock prices and steers us to more conservative funds when it’s not.

It’s not a perfect system, of course. No system is. And when the market shifts from rewarding risk to punishing it, as happens from time to time, things can get a little rough. We got a taste of that when COVID concerns bludgeoned the market in late February and most of March. We got a milder taste of it with the September pullback.

But in a sudden downturn, not all funds react the same way. Some funds are less prone to significant movements than others. Put another way, some funds are “riskier” than other funds. For those new to Upgrading (and for those who may need a refresher), here’s an explanation of how we measure a fund’s risk and describe that risk level to you in the fund data we publish.

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