Most stock funds have suffered sharp losses this year because they can make money only one way—the stocks they own must rise in price. But some mutual funds employ hedging strategies such as shorting (betting against) stocks and buying and selling options and futures, which can deliver decent returns, or at least moderate losses. Bottom Line Personal asked retirement expert Robert Carlson why he is using funds that hedge…
I am allocating about one-quarter of my portfolio’s equity portion to these funds. Ordinarily, I would raise my bond exposure to increase the margin of safety among my investments. But this year, bonds have not played their stabilizing roles due to fast-rising interest rates. While hedge funds often are considered investments only for the ultra-wealthy, here are two that have low initial minimum investments…
Hussman Strategic Growth Fund (HSGFX) holds about 270 stocks that are selling at reasonable prices and have strong fundamental growth. At the same time, fund manager John Hussman, PhD, uses options and futures to hedge against a decline in the market. The fund did poorly in most of the bull market from 2009 to 2020 so I wouldn’t own it now if the stock market improves—but the fund has proved its value this year, rising 17.5% versus a 21.3% loss for the S&P 500. 10-year performance: –4.1%.*
Leuthold Core Investment Fund (LCORX) can invest in almost any kind of investment and sell stocks short. It recently had 16% of its portfolio in short positions in stocks and an additional 34% in cash. The fund is down 5% this year. 10-year performance: 7.1%.
