Hedge Funds for the Rest of Us - Revised
by Richard
The idea of a hedge fund always made sense.
The ability to zig zag through a churning market, taking both long and short positions.
What soured me on the category was the obscene reach for fees. And the mandatory lockup periods preventing timely exits.
In an ideal world, we could invest in hedge funds that charged reasonable fees and allowed daily redemption, as do most other mutual funds.
Our world is far from ideal, but here are a handful of funds I’ve used in family and client accounts this past year that have valiantly outperformed the dismal market.
The usual caveat applies. You should not take this as an iron clad endorsement. Do your own, independent research.
My sense is that the market will eventually - sooner rather than later - reverse course, and these hedge like funds will lag a broad-based exposure to long equity positions.
But if we stay in this choppy pattern, with wild up and down drafts and massive last hour selling binges….these funds might help.
All are available through the Charles Schwab One Source platform, with no load or fee, and most likely through the other major discount broker mutual fund supermarkets.
1. Long/Short Funds:
- RYMFX: Rydex Managed Futures Strategy
- RYSTX: Rydex Hedged Equity
- BRMIX: Laudus Rosenberg Long/Short Equity Investment
- SWHIX: Schwab hedged Equity Investor
2. Commodity Trading Fund:
- DXCTX: Direxion Commodity Trends Investment
3. Conservative Allocation Fund
- PRPFX: Permanent Portfolio
4. Moderate Allocation Funds
Note that the final two categories fall under the rubric of Global-Macro fund strategies.
If these funds are more exotic or esoteric than what you are looking for, remember that Money Market Funds and One year (or less) insured CDs are an excellent choice, from which you may cautiously begin to dollar cost average your way back into the market.
When the reversal finally takes place, it will be breathtaking as money pours in from idle cash accounts.
If you wait until you are once again euphoric over the market, you will have missed the major portion of the recovery.
It may never be easy…but it’s pretty simple.
The big wheel keeps on turning.
