Market Neutral Funds: The Best And Worst Of October

By | November 20, 2015

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By DailyAlts Staff Morningstar’s aggregated Market Neutral category returned +0.67% in October, besting September’s returns of +0.12%. Invesco’s All Cap Market Neutral Fund (MUTF: CPNAX ) was the category’s top performer for an impressive second-straight month, adding 3.03% gains in October to the prior month’s +7.03%. But, while the top funds generally posted lighter gains in October than they did in September, the worst performers sustained even steeper losses. (click to enlarge) Top Performing Funds in October As stated above, the Invesco All Cap Market Neutral Fund was the Market Neutral category’s top performer for the second straight month. Through October 31, the fund had year-to-date returns of +10.88%, and even more impressive three-month and one-year gains of 13.42% and 11.40%, respectively. The fund, which debuted in December of 2013 and has $35 million in assets under management (“AUM”), is available in A (CPNAX), C (MUTF: CPNCX ), R (MUTF: CPNRX ), and Y (MUTF: CPNYX ) shares. The other top performers last month were the Nuveen Equity Market Neutral Fund (MUTF: NIMEX ) and the Zacks Market Neutral Fund (MUTF: ZMNAX ), which posted respective one-month gains of 2.72% and 2.58%. NIMEX, which debuted in June of 2013 and has $55.7 million AUM, had one-year returns of +2.97% through October 31. ZMNAX, which has been around since July 2008 but has just $9.8 million in AUM, was up 7.67% for the year ending on Halloween, ranking in the top 8% of the Morningstar category. All three of October’s top performers had positive returns over the past one, three, ten, and twelve months ending October 31. The Zacks Market Neutral Fund also had positive returns over the past three and five years ending October 31, as well. (click to enlarge) Worst Performing Funds in October The Hussman Strategic Growth Fund (MUTF: HSGFX ) was October’s very worst market-neutral fund to own, losing 6.53%. This is quite a bit worse than last month’s biggest loser, the Castlerigg Event Driven and Arbitrage Fund (MUTF: EVNTX ), which fell just 4.72% in September. HSGFX was down 9.58% for the year ending on October 31. The fund has been around since 2005, producing annualized three- and five-year losses of 7.96% and 7.93%, respectively, though the end of October. The fund has a one-star “negative” rating from Morningstar. The PSI All Asset Fund (MUTF: FXMAX ) and the BlackRock Emerging Market Long/Short Equity Fund (MUTF: BLSIX ) were the next worst performers in October, posting respective losses of 4.77% and 3.01% for the month. FXMAX launched in 2010 and has gone on to generate negative returns across the one-, three-, and ten-month periods ending October 31, in addition to three- and five-year annualized returns of -6.05% and -5.14%, respectively. BLSIX launched in 2011 and also has negative returns across all of Morningstar’s default time frames, including respective one- and three-year annualized losses of 7.01% and 2.54% for the periods ending October 31. (click to enlarge) September’s Best and Worst: Follow-Up Invesco’s All Cap Market Neutral Fund held on to its crown as the best-performing market-neutral fund for a second straight month, but what happened to September’s other top performers? The AQR Equity Market Neutral Fund (MUTF: QMNIX ), which posted a 5.79% gain in September, added just 0.09% in October, ranking in the bottom 38% of the category despite the modest gains. The Vanguard Market Neutral Fund (MUTF: VMNIX ), which returned +5.11% in September, lost 0.85% in October, putting it in the bottom 15% of all market-neutral funds for the month. And what about September’s worst performers? The previously mentioned Castlerigg Event Driven and Arbitrage Fund lost 4.72% in September, but bounced back (a bit) with a 0.62% gain in October. September’s other bottom-three funds in the category – the Visium Event Driven Fund (MUTF: VIDIX ) and the Arbitrage Event-Driven Fund (MUTF: AEDNX ) – which posted respective declines of 4.70% and 3.73% in September, improved with returns of +0.11% and +0.55% in October. Past performance does not necessarily predict future results. Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks. Scalper1 News

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