Funds: What's Ahead for Fund Investors? By Clint Willis PORTLAND, Maine (Reuters) - This decade has been a tough one for fund investors. The average stock fund has lost almost 6 percent annually since the beginning of 2000, a return that encompasses huge losses from 2000 through 2002 and big gains in 2003. Now investors wonder: Will things get better -- or worse? (Clint Willis is a freelance writer who covers mutual funds for Reuters. Any opinions in the column are solely those of Mr. Willis.) Market forecasts are notoriously unreliable. Anyone who claims he or she can say where the Dow will be in a year is overconfident at best. There are too many factors at work for anyone to predict how they will affect the market averages. Even the most sophisticated computer models can't begin to predict what will happen in the world during the next 24 hours, let alone the next 12 months. "Investors should take market forecasts with a grain of salt," said Mike Nozzarella, a portfolio manager with Tarbox Equity in Newport Beach, California. "Every year the market is affected by factors no one saw coming." That's precisely why you need to maintain a well-diversified portfolio. Any investors who base their retirement security on, say, the prediction that real estate stocks will outperform the S&P 500 -- or vice-versa -- are going out on a long limb. There's a good chance something will come along and saw that limb off, sending the investors and their assumptions tumbling to the ground. That said, you might want to make occasional adjustments in your portfolio to reflect reality. Wars, terrorist attacks, economic cycles, elections and other events shape the world, and that world includes your financial portfolio. You probably can't make a bundle by guessing which sector will lead the pack during the next year or two, but there are times when it might be wise to make modest changes in your asset allocation strategy. In particular, you might want to rethink your exposure to risk, whether it involves market volatility or inflation. For example, your current fund mix might leave you too exposed to the risk of a serious and sustained bear market in stocks, bonds, real estate or some other sector. On the other hand, you might discover that your portfolio offers little protection against the risk of rising prices. Should you make such changes today? Consider the current investment landscape. It's complicated, but that's nothing new. It's also a little frightening. Investors enjoyed two decades of strong economic growth and stellar returns during the '80s and '90s. This decade has been different, with a sputtering economy and a stop-and-go stock market. As a result, some investors who were positively radiant with optimism a decade ago have become deeply pessimistic.     Continued ... Quelle "Funds: What's Ahead for Fund Investors?" : reuters.com Main page for "Funds: What's Ahead for Fund Investors?"