Bear Market Protection

For many investors the drubbing of 2008 wears deep and there is a developing view that “Alternative Investments” such as long-short funds, where downside protection is added to a portfolio to stabilize volatility and take advantage of cyclical downdrafts in the marketplace is gaining popularity.

Timing is everything when it  comes to investing and we are advocates of utilizing Inverse-geared Exchange Traded Funds to “immunize” portfolio volility.

Here is a clip from Bloomberg –

Bloomberg) — JPMorgan Chase & Co. and Pacific Investment Management Co. are inundated with money from individuals attempting to mimic the performance of hedge funds speculating that the stock-market rally is over.

So-called bear-market and long-short mutual funds, designed to protect against falling stock prices, attracted a record $10 billion this year through October, more than double the previous high in 2006, according to Morningstar Inc. Asset managers have opened 19 long-short funds, the most in one year.

The funds’ rising popularity shows how skeptical small investors remain even after the Standard & Poor’s 500 Indexrecouped almost half the 57 percent loss incurred from October 2007 to the March 2009 low. Conventional mutual funds that only buy U.S. stocks posted $4.6 billion of redemptions in the first 10 months of the year, while bond funds added $280 billion.  Read more here.

This entry was posted on 24. November 2009 at 13:50 and is filed under Investing, Exchange-Traded Funds. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.