This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Long/Short Funds for the Long Haul

One of the top performers is Aberdeen Equity Long-Short (MLSAX), which returned 7.70% annually over the past decade. With stocks falling during the first half of this year, the fund was ahead of the S&P by 10 percentage points. That showing isn't surprising for a fund that sells short. But Aberdeen also beat the S&P in 2007, a year when the market rose.

The fund has achieved its record by taking long positions in stocks that seem poised to surpass Wall Street's forecasts for earnings growth. Aberdeen goes short stocks that are likely to produce earnings disappointments.

In 2007, the fund took full advantage of its ability to go long and short. Portfolio manager Christopher Baggini scored by shorting banks and other financial stocks -- and he achieved gains by going long on a few financial names, including IntercontinentalExchange (ICE - Get Report), which handles red-hot commodity futures.

"We made money with financials that were not connected to the mortgage problems," says Baggini.

Another winning short seller is Schwab Hedged Equity (SWHIX). The fund aims to outdo the S&P 500 a bit while taking less risk. To limit losses in downturns, the portfolio managers typically keep about 20% of assets in short positions.

That strategy has worked. During the past five years, the fund has returned 8.55% annually, about a percentage point ahead of the S&P.

The fund managers use Schwab's proprietary ranking system, which evaluates 3,000 stocks based on 19 factors, including valuations and free cash flow. The top 5% of stocks earn an A and are considered likely to outperform. The bottom 5% receive an F and are judged to likely underperform.
2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
ICE $229.88 0.81%
AAPL $118.44 -2.36%
FB $94.14 0.14%
GOOG $631.21 0.90%
TSLA $259.99 -2.31%

Markets

Chart of I:DJI
DOW 17,598.20 -91.66 -0.52%
S&P 500 2,098.04 -5.80 -0.28%
NASDAQ 5,115.3820 -12.8990 -0.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs