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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), the Rydex Series Inverse S&P 500 Strategy Fund (RYARX) and the ProFunds Bear ProFund (BRPIX). 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

Sam Patel, CFA, is the manager of mutual fund research for the TheStreet.com Ratings.

In keeping with TSC's Investment Policy, employees of TheStreet.com Ratings with access to pre-publication ratings data must pre-clear any potential trade through the legal department, and are prohibited from trading any security that is the subject of an unpublished rating revision until the second business day after the rating is published.

While Patel cannot provide investment advice or recommendations, he appreciates your feedback; click here to send him an email.

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