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3 Market Neutral Funds to Counter Market Volatility
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U.S. stock markets have been volatile for a pretty long stretch. Given the prevailing economic conditions, a market-neutral fund is particularly relevant for protecting one’s invested capital. This type of fund is designed to provide stable returns at relatively lower levels of risk regardless of market direction.
Market-neutral funds aim to adopt a precision approach by shorting 50% of their assets and holding 50% long. This method seeks to identify pairs of assets whose price movements are related. The fund goes long on the outperforming asset and shorts the underperformer.
Say, for instance, you take a $1 million long position in Pfizer and a $1 million short position in Wyeth, both large pharmaceutical companies. If pharmaceutical stocks fall, you will lose because of your long position in Pfizer but gain from your short position in Wyeth.
AQR Diversified Arbitrage Fund aspires to outperform the ICE BofAML US 3-Month Treasury Bill Index after fees while limiting its tracking risk compared to this benchmark. ADANX invests in a diverse portfolio of products such as stocks, convertible securities, debt securities, loans, warrants and derivative instruments.
AQR Diversified Arbitrage Fund has three-year annualized returns of 7.6%. John Eckert has been one of the fund managers of ADANX since 2022.
Calamos Market Neutral Income Fund seeks high current income consistent with the stability of the principal. CVSIX advisors invest mainly in convertible securities and employ short selling to enhance income and hedge against market risk.
Calamos Market Neutral Income Fund has three-year annualized returns of 3.1%. As of April 2023, CVSIX held 3.5% of its assets invested in Apple Inc.
Hussman Strategic Growth Fund seeks to provide long-term capital appreciation by investing in securities that are not included on the S&P 500 Index, and change its exposure to market fluctuations depending on market conditions. HSGFX advisors also invest in common stocks, except for modest cash balances that may occasionally arise due to the day-to-day management of the portfolio.
Hussman Strategic Growth Fund has three-year annualized returns of 2%. HSGFX has an expense ratio of 1.13% compared with the category average of 1.92%.
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3 Market Neutral Funds to Counter Market Volatility
U.S. stock markets have been volatile for a pretty long stretch. Given the prevailing economic conditions, a market-neutral fund is particularly relevant for protecting one’s invested capital. This type of fund is designed to provide stable returns at relatively lower levels of risk regardless of market direction.
Market-neutral funds aim to adopt a precision approach by shorting 50% of their assets and holding 50% long. This method seeks to identify pairs of assets whose price movements are related. The fund goes long on the outperforming asset and shorts the underperformer.
Say, for instance, you take a $1 million long position in Pfizer and a $1 million short position in Wyeth, both large pharmaceutical companies. If pharmaceutical stocks fall, you will lose because of your long position in Pfizer but gain from your short position in Wyeth.
Below, we share with you three top-ranked market-neutral funds, viz., AQR Diversified Arbitrage Fund (ADANX - Free Report) , Calamos Market Neutral Income Fund (CVSIX - Free Report) and Hussman Strategic Growth Fund (HSGFX - Free Report) . Each has a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of market-neutral funds.
AQR Diversified Arbitrage Fund aspires to outperform the ICE BofAML US 3-Month Treasury Bill Index after fees while limiting its tracking risk compared to this benchmark. ADANX invests in a diverse portfolio of products such as stocks, convertible securities, debt securities, loans, warrants and derivative instruments.
AQR Diversified Arbitrage Fund has three-year annualized returns of 7.6%. John Eckert has been one of the fund managers of ADANX since 2022.
Calamos Market Neutral Income Fund seeks high current income consistent with the stability of the principal. CVSIX advisors invest mainly in convertible securities and employ short selling to enhance income and hedge against market risk.
Calamos Market Neutral Income Fund has three-year annualized returns of 3.1%. As of April 2023, CVSIX held 3.5% of its assets invested in Apple Inc.
Hussman Strategic Growth Fund seeks to provide long-term capital appreciation by investing in securities that are not included on the S&P 500 Index, and change its exposure to market fluctuations depending on market conditions. HSGFX advisors also invest in common stocks, except for modest cash balances that may occasionally arise due to the day-to-day management of the portfolio.
Hussman Strategic Growth Fund has three-year annualized returns of 2%. HSGFX has an expense ratio of 1.13% compared with the category average of 1.92%.
To view the Zacks Rank and the past performance of all market-neutral funds, investors can click here to see the complete list of market neutral funds.
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