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PIMCO StocksPLUS Short Strategy

Short selling is a way for investors to make money when an asset falls in value. But even sophisticated traders can be intimidated by the practice.

So take the guesswork out of short-side trading by getting into PIMCO StocksPLUS Short Strategy (MUTF:PSSAX). The portfolio manager is none other than the “Bond King,” Bill Gross, who operates the world’s largest bond fund, PIMCO Total Return (MUTF:PTTAX). Only instead of looking for investments he thinks will go up based on decades of experience, he’s playing the downside.

The PIMCO StocksPLUS takes a short position on the the S&P 500 Index, providing an effective way to hedge a portfolio against a bear market. For example, during a crushing 2008 where the S&P 500 lost 41%, PSSAX was up a jaw-dropping 47%!

Of course, investors should be warned that when times are good, PSSAX is bad. This year, the fund is off 3% year-to-date as the market has rallied — with a roughly 1% expense ratio charged for the privilege of those losses to boot.

But if you’re afraid the music is going to stop, you might want to consider PIMCO’s short fund as a hedge against decline — or as a profit opportunity if you expect extended trouble for the market.