These funds buy one bunch of stocks and then sell another bunch short. The conceit is that they can make money in both bull and bear markets. Can they? John Rekenthaler, vice president for research at fund tracker Morningstar, is skeptical of the breed. Over the past decade the group has averaged a 1.9% annual return, he says, and that number is boosted by survivorship bias-the tendency of the worst performers in any category to close their doors and vanish from the averages. Subtract inflation and you're losing ground.
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