I am considering investing in the Hussman Strategic Growth Fund. This is effectively a long-short equity hedge fund in mutual fund format and without the hedge fund fees. As the chart shows the fund performed excellently in the last bear market from 2000 to 2002. It hasn't performed so well recently due to using hedging due to the view that stocks are overvalued and the market shows little momentum. It's annual return since inception in 2000 is 12.71%. In the last 5 years my return has been 12.68% p.a. while the MSCI World Index has returned 10.30% and the S&P 500 5.71%. For the 5 years ending June 30 the HSGFX returned 11.55% vs. 2.49% for the S&P 500, while I returned 9.74% and the MSCI returned 6.92%.
The reason why I am now considering this fund, is that since opening a futures account I can separate the country I am investing in from the currency I am investing in. Up till now I have transferred most of my after tax savings to Australia, buying Australian Dollars in the process. Now I can in theory invest in the US and buy Australian Dollar futures if I want to be exposed to that currency.
Looks like the fund is available via Ameritrade though they don't list "Hussman" as a fund family. But they want a $49.99 fee to buy a mutual fund! This might just about make sense for my Roth IRA account if I am buying say a $7000 chunk, but otherwise it would make sense to apply to the fund directly and avoid the fee. Any thoughts?
7 comments:
Have you looked at the TFS Market Neutral Fund? Its ticker is TFSMX.
It is also in Morningstar's 'long-short' category.
No I hadn't heard of it - it is a very small fund - but seems like it is doing very well though the track record is short - will check it out some more. Do you invest in it?
I am one of the portfolio managers of the fund. So, yes, I invest in it.
TFS is a nine year old firm. Has managed hedge funds since 2001. Details on the firm at: www.TFSCapital.com
Good luck!
Aha! Well, you should have said so. Welcome to my blog. I took a look at your website, sounds very interesting. Downloaded the application form and will consider investing. Would like to know more about the investment strategies obviously - do they change between bull and bear market conditions or are truly neutral to market conditions? This because I noticed that the fund when last reported was net long.
TFSMX has generally maintained a long short ratio of around 1.5. In other words, for every dollar in the fund, we have about $1 long and 66 cents short. However, our shorts generally have had a higher beta than the longs. So, the net effect is that the overall portfolio's beta has not been quite as high as the dollar lean would suggest. At the end of October, its beta relative to the S&P 500 was 0.29. You can see this and lots of other info on the 'program summary' that is out on our website.
Of course, the fund's prospectus has a lot of goodies. If you invest, make sure to read it carefully!
HSGFX has a real nice long term track record. I believe the manager changes his beta (or exposure to the market.) Early this decade, the fund did exceedingly well when the fund was betting against the market.
Rich Gates
I probably will invest and blog about it :) Nice to hear from you.
Sounds great! I will also check your blog periodically and see what is going on out here.
But, one unsolicited thought - I have also heard people talk about Diamond Hill Long Short and Schwab Hedged Equity. Might be worth looking at those funds, too.
And, since 'long short' funds are generally uncorrelated to each other, you could consider splitting up your money across the funds that look good. Unlike other sectors (Small Cap Growth, REITs, etc.), you will probably get added diversity from doing this.
Good luck!
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