Out of 5,739 funds in the general equity category, the top ten performers of 2002 have been some of the worst performers in 2003. Not surprisingly, most of them are classified as “bearish funds,” and they profit from market or index downturns.
The top gainer in 2002, the Prudent Bear Fund (BEARX), which returned 62.9%, is down 11.5% in 2003 through the end of August. In contrast, the average fund in the general equity category rose 20.1% through August 29, after falling 22.3% in 2002, according to our data.
Investors have to be careful when investing in “bearish funds,” since they are often used as a tactical play, or hedge against the market, and have made poor long-term buy-and-hold investments. Although “bearish funds” gained 8.1% on average for the three-year period ended in August, they lost 3.9% for the five-year period, versus a 2.5% gain in the S&P 500, and a 5.3% gain for the average general equity fund.
2002 Return (%)2003 Return Through 8/29 (%) Three-Year Annualized Return Through 8/29 (%)Five-Year Annualized Return Through 8/29 (%)
- Prudent Bear Fund (BEARX) +62.9-11.5+28.9+0.8
- Rydex Dynamic Funds:Venture 100 Fund (RYVNX) +59.3-53.5+13.8N/A
- ProFunds:UltraShort OTC ProFund/Inv (USPIX) +48.6-53.2+11.4-46.8
- ProFunds:UltraBear ProFund/Inv (URPIX) +38.1-30.2+16.2-10.4
- Rydex Dynamic Funds:Tempest 500 Fund (RYTPX) +37.5-30.3+14.9N/A
- Rydex Srs Tr:Arktos Fund/Inv (RYAIX) +35.5-29.9+20.5N/A
- Potomac OTC/Short/Investor (POTSX) +32.6-31.6+14.4-21.4
- AXA Rosenberg:Value Long/Short Equity/Istl (BMNIX) +28.3-7.9+12.7+1.4
- Rydex Srs Tr:URSA Fund (RYURX) +22.2-15.4+12.2-0.9
- Potomac US/Short/Investor (PSPSX) +17.9-16.2+8.3-4.5
- Average General Equity Fund-22.3+20.1-9.4+5.3
- S&P 500 Index-22.1+15.9-11.4+2.5
- Average Bearish Fund+32.2-7.6+8.1-3.9
Source: Standard & Poor’s. Total Returns are in U.S. dollars and include reinvested dividends. Data as of 8/29/03