Skye Investment Advisors of Los Gatos, Calif. is seeking shareholder approval to liquidate the Bearguard Fund, according to a preliminary proxy statement filed Jan. 31 with the Securities and Exchange Commission.
Skye Investment Advisors, the adviser to the fund, has been subsidizing the Bearguard Funds' expenses, capping them at 2.75 percent and 2.50 percent for investor and institutional share classes, respectively, according to the proxy. Operating expenses for the year ended Oct. 31, 2000 were actually 20.12 percent and 20.05 percent for investor and institutional share classes, respectively, according to the proxy.
The fund, which was introduced in November 1999, struggled to attract assets even though it employed a short-selling strategy that allowed it to outperform the market by 26 percent year-to-date, said Paul McEntire, portfolio manager, president and chairman of the fund. However, the fund has only managed to generate $1.3 million in assets, said McEntire.
"We thought the unique nature of the fund would generate more interest than it did," he said. When the fund launched, the company said it was the first short-only stock mutual fund.
Skye Investment Advisors attempted to sell the Bearguard fund using its website and marketing the fund's unique investment strategy. Even though the fund generated a fair amount of publicity, it could not attract a sufficient level of assets, McEntire said. "I still believe the product is a good one," McEntire said. "If we had to do it again, we would do it with a load or a larger fund raising at the beginning." The fund was launched with only $700,000 in assets, according to a company spokesperson.