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An Alternative Fund That Takes the Edge Off Equities

A.J. D'Asaro

A.J. D'Asaro: The Medalist of the Week is the Gateway Fund. This fund buys an S&P 500-like portfolio and then puts an option collar on it, which caps both the upside and the downside. This fund's 30-year track record demonstrates viability across full market cycles. The fund is currently on its second generation of management; however, we feel the transition was made seamlessly, and the process remains unchanged. This fund delivers approximately 35% of the upside of an S&P 500 portfolio and 35% of the downside. The fund's option collar, however, protects a little more on the downside in market downturns and will cap the upside in a frothy market environment such as 2013. With its low market exposure, the Gateway Fund is a good choice for investors looking to take some equity risk off the table.