Beyond the pigeonhole of pure stock or pure bond mutual funds are so-called alternative funds, which seek out and follow hybrid strategies. TheStreet.com Ratings has reviewed the best-performing open-end funds in the third quarter that fall outside of usual fund categories. In the third quarter, the carnage was real. The Diamonds Trust ( DIA), which tracks the performance of the Dow Jones Industrial Average, slid 3.8%, while the S&P 500 Index sank the SPDR Trust ( SPY) by 8.9%. The PowerShares QQQ ( QQQQ), which gauges the Nasdaq 100 Index, collapsed 13.8%. By comparison, the meager returns generated by the top 10 hybrid-strategy funds look pretty good. The only exception is the 21.3% return generated by the Direxion Dollar Bull 2.5X Fund ( DXDBX) -- that performance looks plain great. The U.S. Dollar Index, tracked at 250% leverage by this fund, appreciated 9.6% in the quarter as the economic prospects of the U.S. appeared relatively stronger than those of Europe, Japan and the U.K. With a flexible portfolio strategy, the Comstock Capital Value Fund ( DRCVX) ranked second with a return of 5.5% for the most recent quarter and 21.2% over the last 12 months. At the beginning of the third quarter, the Comstock fund shifted to holding 87% U.S. Treasury bills and bearish positions of 45.8% in bets against the S&P 500 with futures and puts and 23% equities shorts on Wells Fargo ( WFC), Nokia ( NOK) and SAP ( SAP). However, the Comstock fund's 2.6% portfolio position in PowerShares DB US Dollar Index Bearish Fund ( UDN), which fell 8.4%, and 2.2% position in StreetTracks Gold Trust ( symbol), which sank 6.9%, tempered what could have been an even stronger quarterly return. Lastly, the Direxion 10-Year Note Bull 2.5X Fund ( DXKLX) is up 3.4% for the quarter and 21.7% for the year, a direct beneficiary of the flight to quality during the current market turmoil. Similarly, the Pimco Stockplus TR Short Strategy Fund ( PSTIX) gained 3.1% in the last three months and 28.1% in the last 12 due to its bets against the stock market.
For more information, check out an explanation of our ratings.
|10 Best-Performing Alternative Investment Mutual Funds in the Third Quarter|
|Fund (Ticker), Rating||Total Return 3 Months||Total Return 1 Month||Total Return 1 Year||Objective|
|Direxion Dollar Bull 2.5 X Fund (DXDBX US), U||21.33%||4.01%||NA||Currency|
|Comstock Capital Value Fund (DRCVX US), D||5.46%||10.57%||21.17%||Flexible Portfolio|
|Managers AMG Funds - FQ Global Alternatives Fund (MGACX US), U||4.56%||0.98%||0.53%||Derivative-Asset Allocation|
|Direxion 10 Year Note Bull 2.5X Fund (DXKLX US), U||3.44%||-1.66%||21.65%||Derivative-Asset Allocation|
|TIAA-CREF Institutional Real Estate Securities Fund (TIREX US), D||3.10%||-0.86%||-13.54%||Sector Fund-Asset Allocation|
|PIMCO StocksPlus TR Short Strategy Fund (PSTIX US), A+||3.09%||3.63%||28.12%||Derivative-Asset Allocation|
|ING GET Fund US Core Portfolio-11 (IGUCX US), U||2.20%||-0.63%||-11.18%||Flexible Portfolio|
|Pioneer Protected Principal Plus Fund II (PPFAX US), C||1.65%||0.77%||3.50%||Balanced|
|Morgan Stanley FX Series Funds - Alpha Plus Strategy Portfolio (FXPAX US), U||1.57%||-1.82%||-0.10%||Currency|
|Marketfield Fund (MFLDX US), U||1.56%||-1.33%||NA||Flexible Portfolio|
|Source: TheStreet.com Ratings and Bloomberg|