DAILY ALTS: Market Neutral Funds: Best And Worst Of November

Ted

FYI: Market-neutral funds balance long and short holdings, generally in pursuit of something close to a 0% net-long exposure. This allows investment managers to neutralize beta and focus on generating alpha – or at least, that’s the idea.

In November, the top three market-neutral mutual funds generated returns ranging from +0.94% to +3.52%, while the category’s three laggards returned between -2.53% and -3.19%. In this month’s review, we look beyond November’s performance and also consider the composition of each of the featured funds’ three-year standard deviation and Sharpe ratio.
Rregards,
Ted
http://dailyalts.com/market-neutral-funds-novembers-best-and-worst/

BobC

We track and use two, neither of which were on the list, which I suppose is good. Vanguard VMNFX is up more than 5% in the last year, dang good for this conservative, low-cost fund. AQR Equity Market Neutral QMNIX has had an amazing year, although the management will tell you the 18% return YTD is not something to be expected on a regular basis. It is more expensive than VMNFX, but is also a lot more active, but its 1.3% ER is lower than a lot of alts.

Bitzer

Yes, I like both the Vanguard and (especially) the AQR offerings. Unfortunately many individual investors have been locked out of these funds (at least at Fidelity) with unrealistically large minimum purchase requirements.

Mark

@Bitzer - you can purchase the investor share class of the AQR fund (QMNNX) for $2500.00 through Fidelity if interested. The Vanguard offering will cost you $250K minimum plus a $75 TF.

AndyJ

At Fidelity, there is a $2,500 initial buy for AQR, but it's only in retirement accounts. (Bitzer, the Fees and Distributions page for a fund is the place to look at Fido for the details on cost & purchase minimums - the Summary page is the abbreviated version.)