Mutual funds that place bets against the market by shorting stocks are doing better than typical, long-only funds. Mutual funds that short stocks take on different levels of risk, using various derivatives, such as futures, to protect the bets taken against indexes.
Funds in Morningstars bear-market category have increased 9% this year, while the S&P 500 index has fallen 12.7% and typical U.S. stock funds have dropped 11.2%.
"The spread between the best-performing stocks and the worst-performing stocks has gotten very wide," Harin de Silva, president of Analytic Investors, told Barrons magazine. "It's a great environment for short selling if you can get the stock selection right."
De Silvas funds short holding include Mylan Laboratories, Leucadia National and Louisiana-Pacific, among others.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.