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Friday, August 26, 2005|
More Hedge Like Mutual Funds in the Offing
Is the demand for long\short mutual funds growing? The Friday Fund Track article in the Wall Street Journal suggests that it may be. The paper reports that two new funds are opening in coming weeks and that one now closed fund will reopen to new investors on Monday. The new products are coming as the performance of long\short has topped that of the stock market so far in 2005.
One alluring aspect of these funds for fund managers is that they are able to levy above average fees for executing the hedge-fund-strategy. Average fees for long/short funds run from 200 to 300 basis points, according to the paper.
The new funds are coming from Rydex Investments and American Century Investments. While the news that Rydex is offering a fund is not a surprise -- the Rockville, Maryland-based firm makes a living out of offering products that are rare in the fund industry -- the addition of an American Century fund suggests that the niche is moving to the mainstream.
Meanwhile, Caldwell & Orkin is reopening its Opportunity Fund Market to investors on Monday.
The two top performing long\short mutual funds both belong to niche fund providers. They include Robeco Boston Partners Long/Short Equity Fund (up 14.47 percent in 2005) and Diamond Hill Focus Long-Short Fund (up 10.75 percent).
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