S&P: Five Hot Funds Do Well by Selling Short

August 8, 2002 (PLANSPONSOR.com) - Five of this year's top performing mutual funds are profiting from short selling strategies because of the still struggling markets, Standard & Poor's reported.

On average, the total return for the five funds through July 26, 2002 was 28.57%, compared with the average domestic fund’s return of -12.07%, S&P said.

According to S&P, the five funds are:

  • AXA Rosenberg: Value Market Neutral/Inv
  • James Advantage Market Neutral Fund/A
  • Phoenix-Euclid: Market Neutral/B
  • Potomac US/Short/Investor
  • Prudent Bear Fund.

S&P said the five have increased their Standard & Poor’s Fund STAR ranking by an average of 2.5 STARS in the last three months. They are designed to flourish in a falling market and rely heavily on shorting stocks in order to deliver healthy returns as major markets decline.

The Potomac US Short Fund was created as a negative image of the S&P 500.  The fund correlates inversely with the performance of the index by shorting its component stocks, S&P said.

The fund gained 13.80% through the first half of 2002 while the Index declined 13.79%, S&P said in the release.
Another fund, the Prudent Bear Fund is designed to exploit a weak market environment, having shot up 47.9% in the first half of 2002. This first half performance easily surpassed the -11.2% return that its equity sector peer group suffered during the same period.  Standard & Poor’s currently ranks the fund 5 STARS.