Funds Will Offer Access to Equities with a Hedging Safety Guard
The Toews Corp. of Philadelphia is planning to launch two new mutual funds on Aug. 1 to take advantage of investors' desire for both access to equities and downside protection, the company announced today.
During rising markets, the Toews S&P 500 Hedged Index Fund and Toews Nasdaq 100 Hedged Index Fund will invest mostly in equities, and will closely track their respective indices. They will also invest in derivative instruments that attempt to track the performance of the S&P 500 and Nasdaq-100, respectively, such as index options, futures contracts and exchange-traded funds.
However, if markets begin to fall, a hedge is put in place, which tries to prevent further losses and seeks 'treasury rates of return,' according to the company.
The Toews Funds' hedging moves are based on signals from a proprietary system developed by Phillip Toews, the company's CEO. The system focuses on index price movements that historically have been associated with the beginning stages of negative and positive trends in the equity market and measures these indicators against current conditions.
The company maintains that virtually no significant stock market declines have occurred without warning, and so the Toews system interprets the preliminary period of small losses as a signal to hedge against declines in the stock market before extensive declines, according to the company.
'There are currently more than 8,000 mutual funds in the marketplace, and the Toews Funds are among the first to develop an investment philosophy that attempts to offer downside protection,' said Toews, in a statement. 'In our experience, investors rarely walk into their financial adviser's office and say, 'I want to beat a certain benchmark,'' according to a company statement. 'Instead, we think they tend to be looking for reasonable growth with limited risk of loss Certainly we would like to outperform benchmarks too. But we primarily work to allow investors access to stock market rates of return, without assuming all the risks of investing in the stock market, because we believe that's what people really want.'
Toews had $160 million in assets under management as of June 30, according to the company.