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3 Top-Ranked Market Neutral Funds to Sail Through Volatility
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U.S. stock markets have been volatile for a pretty long stretch. Given the prevailing erratic economic conditions, a market-neutral fund is particularly relevant for protecting one’s invested capital. This type of fund is designed to provide stable returns at relatively lower levels of risk regardless of market direction.
Market-neutral funds aim to adopt a precision approach by shorting 50% of their assets and holding 50% long. This method seeks to identify pairs of assets whose price movements are related. The fund goes long on the outperforming asset and shorts the underperformer.
Say, for instance, you take a $1 million long position in Pfizer and a $1 million short position in Wyeth, both large pharmaceutical companies. If pharmaceutical stocks fall, you will lose because of your long position in Pfizer but gain from the short position in Wyeth.
Below, we share with you three top-rated market-neutral mutual funds, viz. AQR Diversified Arbitrage Fund Class N (ADANX - Free Report) , Victory Market Neutral Income Fund Class A (CBHAX - Free Report) , and Calamos Market Neutral Income Fund Class A (CVSIX - Free Report) . Each has earned a Zacks Mutual Fund Rank #1(Strong Buy) and we expect the fund to outperform its peers in the future. To view the Zacks Rank and past performance of all market-neutral mutual funds, investors can click here to see the complete list of funds.
AQR Diversified Arbitrage Fund Class N seeks long-term positive return by investing in a well-diversified portfolio equity, convertible securities, debt securities, loans, warrants, derivative instruments like futures, forwards, and options along with credit default swaps, credit default index swaps. ADANX advisors seek to outperform the ICE BofA ML US 3-Month Treasury Bill Index after expenses.
AQR Diversified Arbitrage Fund Class N has a three-year annualized return of 9.9%. As of the end of June 2022, ADANX held 324 issues, with 50.81% of its assets invested in short-term investment.
Victory Market Neutral Income Fund Class A seeks high current income using a proprietary, rules-based market-neutral investment strategy. CBHAX advisors seek income from their investments while maintaining a low correlation to the foreign and domestic equity and bond markets.
Victory Market Neutral Income Fund Class A has three-year annualized returns of 2.9%. CBHAX has an expense ratio of 0.78% compared with the category average of 2.30%.
Calamos Market Neutral Income Fund Class A seeks high current income in line with its principals by investing in equities, convertible securities of U.S. companies irrespective of their market capitalization and options and high-yield, fixed-income securities. CVSIX advisors also use short selling and swaps to enhance income and hedge against market risk.
Calamos Market Neutral Income Fund Class A has returned 1.9% in the past three years. John P. Calamos has been the fund manager of CVSIX since September 1990.
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3 Top-Ranked Market Neutral Funds to Sail Through Volatility
U.S. stock markets have been volatile for a pretty long stretch. Given the prevailing erratic economic conditions, a market-neutral fund is particularly relevant for protecting one’s invested capital. This type of fund is designed to provide stable returns at relatively lower levels of risk regardless of market direction.
Market-neutral funds aim to adopt a precision approach by shorting 50% of their assets and holding 50% long. This method seeks to identify pairs of assets whose price movements are related. The fund goes long on the outperforming asset and shorts the underperformer.
Say, for instance, you take a $1 million long position in Pfizer and a $1 million short position in Wyeth, both large pharmaceutical companies. If pharmaceutical stocks fall, you will lose because of your long position in Pfizer but gain from the short position in Wyeth.
Below, we share with you three top-rated market-neutral mutual funds, viz. AQR Diversified Arbitrage Fund Class N (ADANX - Free Report) , Victory Market Neutral Income Fund Class A (CBHAX - Free Report) , and Calamos Market Neutral Income Fund Class A (CVSIX - Free Report) . Each has earned a Zacks Mutual Fund Rank #1(Strong Buy) and we expect the fund to outperform its peers in the future. To view the Zacks Rank and past performance of all market-neutral mutual funds, investors can click here to see the complete list of funds.
AQR Diversified Arbitrage Fund Class N seeks long-term positive return by investing in a well-diversified portfolio equity, convertible securities, debt securities, loans, warrants, derivative instruments like futures, forwards, and options along with credit default swaps, credit default index swaps. ADANX advisors seek to outperform the ICE BofA ML US 3-Month Treasury Bill Index after expenses.
AQR Diversified Arbitrage Fund Class N has a three-year annualized return of 9.9%. As of the end of June 2022, ADANX held 324 issues, with 50.81% of its assets invested in short-term investment.
Victory Market Neutral Income Fund Class A seeks high current income using a proprietary, rules-based market-neutral investment strategy. CBHAX advisors seek income from their investments while maintaining a low correlation to the foreign and domestic equity and bond markets.
Victory Market Neutral Income Fund Class A has three-year annualized returns of 2.9%. CBHAX has an expense ratio of 0.78% compared with the category average of 2.30%.
Calamos Market Neutral Income Fund Class A seeks high current income in line with its principals by investing in equities, convertible securities of U.S. companies irrespective of their market capitalization and options and high-yield, fixed-income securities. CVSIX advisors also use short selling and swaps to enhance income and hedge against market risk.
Calamos Market Neutral Income Fund Class A has returned 1.9% in the past three years. John P. Calamos has been the fund manager of CVSIX since September 1990.
To view the Zacks Rank and past performance of all market-neutral mutual funds, investors can click here to see the complete list of funds.
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