Short Stock Funds Clean Up

Recent debate has raged about the leveraged shorting strategies employed by some exchange-traded fund products in the market, and Jim Cramer and others have pointed out issues in regards to rebalancing, as well as the increased volatility these investment vehicles bring to the market. Them there's the ultimate criticism: some performance numbers, especially of sector funds, are outright disastrous.

This does not mean that all shorting strategies employed by ETFs can be debunked as can be seen from the TSC Ratings table of the top 20 rated stock mutual funds for the month of November. All funds below carry an A+ rating; however, the clear difference in the list is the top three funds, which are all designed to profit from market falls.

Investors should focus their attention on the Federated Prudent Bear Fund (BEARX Quote), the Rydex Series Inverse S&P 500 Strategy Fund (RYARX Quote) and the ProFunds Bear ProFund (BRPIX Quote). These funds are still going to benefit from potential market downdrafts that will be in existence in 2009.

As can be seen from the returns over the past month, quarter and year to date, these funds have consistently outperformed their competitors and needless to say the market as a whole. Keep them in mind for the New Year.

Best-Rated Stock Funds Name Ticker One-Month Return Three-Month Return Year to Date Prudent Bear Fd BEARX 4.46 29.59 30.62 Rydex Ser-Inv S&P 500 Stgry A RYARX 4.56 28.38 44.38 ProFunds-Bear Fund Inv BRPIX 4.30 28.33 44.32 Forester Discovery Fund INTLX 0.59 1.68 2.70 Waddell & Reed InvestEd Conserv A WICAX 0.09 0.38 1.43 J Hancock II Total Return Fd JHTRX 0.68 -3.60 -1.48 JPMorgan Market Neutral Fund A JMNAX 0.22 0.47 -2.04 GAMCO Mathers Fund MATRX -0.19 -0.38 0.19 ING GET U.S. Core Portfolio - Ser 3 IGUEX -0.11 -1.97 -3.67 James Advantage Market Neutral A JAMNX -0.65 2.61 -1.22 Arbitrage Fund (The) - Retail ARBFX -2.52 -5.00 -3.78 Fund *X Flexible Income Fund INCMX 1.05 -1.76 -5.54 Manning & Napier Pro-Blend Con Term EXDAX 0.90 -6.42 -6.67 ING PIMCO Total Return S IPTSX -0.29 -5.95 -5.36 Lotsoff Capital Mgmt Active Income LCMAX -0.50 -3.28 -1.86 ING GET U.S. Core Portfolio -Srs 2 IGUDX -0.23 -3.59 -5.29 DWS Target 2014 Fd A KRFEX 2.08 -2.90 -2.38 Elfun Income Fund EINFX 0.92 -5.24 -5.22 Columbia Mort & Asset Backed Port NMTGX 1.47 -1.93 -5.97 Wells Fargo Avtg DJ Tgt Today Inv WFBTX 1.43 -6.39 -7.45