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A Long-Short Fund for Navigating Choppy Waters

A.J. D'Asaro

A.J. D'Asaro: With today's low bond yields, many investors are turning to long-short equity funds as a way to boost their returns while still maintaining a low-risk portfolio.

The Schooner Fund (SCNAX) stands out in the long-short equity category because, in the current environment, it is 100% to 150% hedged, which means that investors are fully protected in the event of a market decline.

However, this strong level of protection comes at a cost. The worst type of market for this fund is a flat equity market, where the fund would experience no returns from its underlying stocks and be on hook to pay up to 10% annualized in hedging fees.

The Schooner Fund does perform exceptionally well in periods of heightened volatility when the market experiences sharp declines or sharp uptrends. In today's volatile markets frequently dominated by headlines from Greece and China, the Schooner Fund can provide stability for investor portfolios.