Thursday, August 18, 2011

No more hedging about HDGE

On February 1st of this year I noticed a new bear market ETF and immediately christened it as my new top Armageddon fund. This move might have seemed premature to some given the short track record at the time, but the performance of the Active Bear ETF (HDGE) has now exceeded even my optimistic expectations. As of today's market close (August 18, 2011) HDGE has bagged a six-month gain of 19.6%, while the S&P 500 index has lost 15.1%.

So far HDGE has not only risen during a market decline (a basic requirement of any bear fund) but it has actually gained more than the S&P 500 has lost. It may be that the fund managers have simply picked more volatile stocks rather than the best candidates for short selling, but regardless of the reason, I'm pleased with the results. HDGE remains securely at the top of my list of Armageddon funds.


Cathy said...

Wish I'd put a couple bucks in there.


Jody Wilson said...

Well, timing is everything. HDGE will do quite poorly when the next rally begins.

Keith Wilson said...

This HDGE fund is not derivaties but actual stocks, right?
And it is not a pro (x2)
How would this compare with SSD ?

Jody Wilson said...

Including Friday's closing prices, SDS has outperformed HDGE over the past 6 months, but by less than you might think. SDS gained 28% to 22% for HDGE. Remember HDGE doesn't use any derivatives, while SDS uses *only* derivatives in an attempt to achieve double the inverse return of the S&P 500.

If we encounter a major economic catastrophe, SDS may stop trading like SKF did back in 2008, or it may even lose value despite falling stock prices. HDGE will be unaffected when the next hiccup happens in the derivatives market - if anything the panic brought about by a collapse in derivatives would only boost HDGE's returns.