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hedging

Hedging Your Mutual Fund Portfolio - Why Hedge Your Portfolio?

What do farmers and airlines know that you don’t?

So far in our series on managing risk we’ve taken a look at market timing and portfolio diversification as two powerful techniques to control risk in our mutual fund portfolios. In this article we’ll take a look at the third and final one: hedging.

Bear Market Investing - Hedging with Mutual Funds and ETFs

In previous articles we covered the possible advantages of hedging your portfolio as another way to reduce risk. This time we will cover a method to do exactly that using only mutual funds or ETF’s that can be purchased in a cash brokerage account.

Historically to hedge you had to sell short shares of an ETF that tracks the market, like SPY or QQQQ, or to buy put options on the major indices. The problem with that is that it requires a margin account, which eliminates most retirement accounts, and many retail accounts. Plus many people have this innate fear of short selling, and are concerned that they could lose more than they invested if the markets were to take off.

How Much Do You Need to Retire - It May Be Less than You Think

Recently we’ve gone series on risk management for our portfolios, it seems that it would be interesting to go back and look at how much you need to retire if you apply some of these techniques.

The full story on the assumptions behind the conventional wisdom can be found at our previous article on how much you need to retire.

Low Risk Funds - Hedge Mutual Funds Work to Lower Risk

This article on hedge mutual funds was originally published in 2006. Many of these hedge funds have done reasonably well in the recent market tumult, and it may be time to look into these funds again.

In today’s volatile markets we are always looking for ways to increase our portfolio returns while limiting the downside risk in our investment portfolio as well. There are many more options to do so than even just a few years ago. One recent development are mutual funds that are not structured like typical long only mutual funds. These are funds that don’t invest solely in stocks and bonds.

Hedge Mutual Funds - Making Sure Your Mutual Fund Hedge is Working

In volatile market times like those we have had recently, there is a natural increase in interest in hedge mutual funds as a way to protect capital in turbulent times. We surveyed a sample of hedge mutual funds in the past, highlighting a sample of funds that use a variety of techniques to mitigate market risk as part of a hedging strategy. Recently ING has introduced another variant of hedge mutual funds, the ING 130/30 Fundamental Research fund.

Bear Funds - Bear Mutual Funds and ETFs

As we discussed in our previous article on our hedged mutual fund portfolio when the market is moving against the bulls as quickly as it has been recently, its time to take another look at risk management strategies, and in this case specifically hedging strategies. There are a number of ways to hedge your mutual fund or ETF position, but our favorite is the use of bear funds or bear ETFs.

Hedged Mutual Fund Portfolio to Manage Portfolio Risk - Diversification May Not Be Enough

A day like today in the market can make it painful to look at your mutual fund holdings. For example, of the Fidelity Select funds that we track, they were all down anywhere from 0.41% to 3.24% It’s clear that in order to manage mutual fund portfolio risk, diversification alone will not do much on a day like today, when everything is down. (This is an example of what is sometimes referred to as negative co-variance, where market instruments like mutual funds and ETFs tend to be uncorrelated on the upside, but when bad news strikes, they have a greater degree of correlation (i.e. they all go down at the same time).

Hedge Fund ETF - Hedge Fund for the Average Investor?

Saw an article today on Yahoo Finance. The Man Group has announced that they will list their hedge fund as an ETF on the New York Stock Exchange. The type of ETF is what make this announcement interesting to me.