Ranger Equity Bear ETF
What if you’re confident that the gains of the first half will stick, but less confident that the second half of 2013 will be great? Then the AdvisorShares’ Ranger Equity Bear ETF (HDGE) might be a great option.
Don’t let the name fool you. Unlike some inverse ETFs out there that simply do the opposite of a major stock market index, the actively managed HDGE ETF takes strategic bets on equities it expects to crash and burn. Top holdings (to the downside, of course) right now include CenturyLink (CTL) and Altera (ALTR) — two stocks that are handily in the red year-to-date despite gains for the broader market.
HDGE is very good at picking bad stocks. Of course, a rising market has made a stiff headwind and the fund is down by double-digits year-to-date … however, it’s down less than other bear funds, and could be a great hedge (as the ticker implies) for the second half.
I interviewed Active Bear ETF manager John Del Vecchio about a year ago, and he explained to me that the strategy is as much a hedge (hence the ticker) as a profit vehicle in down times. That this bearish ETF can hold a bit firmer than peers even when its strategy is out of favor makes that argument pretty compelling.
HDGE, which has about $225 million in assets, charges a steep expense ratio of 3.3% … not a pleasant amount to shave off your profits. However, if you’re not comfortable shorting stocks, then this is an alternative — and one that isn’t all that much more expensive than some platforms considering the short interest expense and fees involved with a bear strategy.
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at email@example.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not hold a position in any of the stocks named here.