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A Unique Process Serves This Market-Neutral Fund Well

Jason Kephart, CFA

Jason Kephart: BlackRock Global Long/Short Equity (BDMIX) takes a unique approach to stock-picking. This quantitative fund is run by BlackRock's Scientific Active Equity Group. In addition to using traditional factor analysis such as value momentum to rank global stocks, it also uses big data, mainly through text mining. Management has created software programs that can scrape things such as analyst reports and conference-call transcripts, basically looking for clues that are going to give them a sign of future performance.

One of the best trades in 2014, for example, was a long bet on semiconductors. That came from reading conference-call transcripts of automobile companies and noticing CEOs were talking more and more about Internet-enabled cars.

Bets like that have helped the fund to 6.5% annualized returns since it launched in December 2012. A recent fee reduction makes us even more confident in the fund being able to continue that performance going forward and earns it a Morningstar Analyst Rating of Bronze.