Market-Neutral Funds Get Highest Ratings

In the best-case scenario, if the sale is completed, the position can be liquidated for a profit. When the acquiring company is offering stock instead of cash, the acquiring company can be sold short simultaneously with buying the target in an arbitrage transaction to immediately pocket the difference.

When a proposed merger fails to happen, the arbitrage strategy can lose money. The Arbitrage Fund uses stock options and short selling to minimize market risk and volatility.

The most highly rated stock fund that doesn't follow a market-neutral strategy is the Permanent Portfolio(PRPFX). The fund uses categorical diversification in gold, silver and Swiss franc assets to balance equity risk from real estate, natural resources and aggressive growth stocks.

Finally, the Shepherd Large Cap Growth Fund (DOIGX) liquidated all its stock holdings and held cash as of mid-September, smartly missing out on this bear market.

10 Best-Rated Stock Mutual Funds Fund (Ticker) Rating Total Return 3 Years Total Return 1 Year Objective JPMorgan Market Neutral Fund A (JMNAX) A+ 5.37% 1.82% Equity Income Arbitrage Fund (The) - Retail (ARBFX) A+ 4.18% 1.39% Growth & Income JPMorgan Multi-Cap Mrkt Netral A (OGNAX) A+ 0.49% -4.00% Asset Allocation - Domestic Virtus Mkt Neutral Fund Class A (EMNAX) A+ -2.24% -0.58% Growth - Domestic Aberdeen Equity Long Short A (MLSAX) A+ 0.03% -11.30% Growth - Domestic Calamos Market Neutral Income Fd A (CVSIX) A+ -2.77% -15.47% Equity Income Highbridge Stat Mkt Neutral A (HSKAX) A+ 4.70% 4.41% Equity Income Permanent Portfolio Fund (PRPFX) A+ 1.89% -18.61% Asset Allocation - Domestic American Century Long-Short Eq A (ALIAX) A+ 1.00% -7.01% Growth - Domestic Shepherd Large Cap Growth Fund (DOIGX) A+ -2.32% -9.96% Growth - Domestic Source: TheStreet.com Ratings

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