Fri, Jun 11 2004
Hedge Funds Coming to a Mutual Fund Company Near You?

Historically mutual funds have invested to appreciate the up side of the market, and historically, markets have generally trended higher over long periods. But, we all know markets don't always go up, so hedge funds were created to invest with consideration for both market swings. Hedge funds which may use high-risk techniques, generally not allowed for mutual funds, such as selling short and leveraging, have provided a higher risk, higher potential rewards vehicle for mainly wealthier investors. Now that may be changing according to an article by Paul Oranika, Editor-in-Chief at HedgeCo.Net. And minimum investments have been reduced from the traditional $1 to as low as $25,000. Recently, while some hedge funds have gained from oil investments, back in the real world, Reuters reports that hedge funds overall lost money for the second straight month.

One of the advantages of ETFs (exchange traded funds) was supposed to be cost efficiencies. However, looking at seven different match ups, William Bernstein, of EfficientFrontier.com, found that index funds from Vanguard outperformed historically, according to a CBS MarketWatch article by John Spence, the editor of www.IndexUniverse.com. According to Spence, "The answer lies in the fund company's willingness to optimize cash flow in the index futures market and to trade opportunistically." Get the details here.

The Kiplinger has just released the Kiplinger 25, top stock funds, including lots of no-load funds. Among the usual criteria for selection, such as performance, experience, risk, expenses, etc., we find an "integrity" section, in part noting that none of the funds listed has been involved in the recent fund-trading scandals. Stock fund categories include large-company funds, small-company funds, all-size company funds, specialized funds, and international funds. The complete article and associated pages are here, as an MSN Money Central Extra. And, speaking of extras, you'll also find links to the top five bond funds "for rising interest rates," and a guide for building portfolios for various goals from the top individual selections.