Ranger’s HDGE Shorts Opportunistically Across All Markets

John Del Vecchio, Portfolio Manager, Ranger Alternative Management sits down with Julie Cooling, Founder & CEO, RIA Channel to discuss their actively managed ETF, HDGE.

Goodbye style boxes, hello “Go Anywhere”! Great stock pickers don’t worry about style drift, benchmarking or placing their bets on too few stocks. Great stock pickers trust their guts. Good instincts come from experience, and trusting one’s instincts these days in a world of institutional measures, relative performance and style-drift fears, well, it rarely exists. Gone are the days where you could buy one fund with the goal of absolute performance. Is it any wonder that on average, active managers are lagging in performance behind passive, index-based strategies? Now it’s “well, congratulations, you didn’t lose as much as everyone else,” so “you win.” Is that really how it works?

Introducing: diversification. “Don’t put all your eggs in one basket,” uh-dah. So now you’re supposed to buy lots of strategies, and fit them together beautifully so that if one goes down, another goes up – this is called non-correlation. Don’t buy the same stuff, lower your overall risk, and create a ying/yang situation in your investment portfolio. Sounds great, but what happens when everything starts to seem correlated? The world is flat after all. Global stocks seem to all be moving together, to some degree. That’s where hedging comes in, and what’s a stock picker’s dream in hedging? A go-anywhere short (sell) strategy that benefits when the loser stocks they pick to “sell short” (without owning them), go down.

Anytime portfolio managers are doing organic company research, they uncover bad companies. These companies may have draining revenue streams, high costs, bad management, macro events driving poor results – whatever it is, identifying losers is half of a portfolio manager’s day’s work. So why not benefit from all that research? Why not exploit the other side of a trade? That’s where HDGE comes in.

HDGE is a go-anywhere, actively managed, exchange-traded fund (ETF) that shorts companies its managers identify as severely troubled stocks. HDGE has the flexibility to short stocks of $1 billion in market capitalization or greater, in any sector, without the use of leverage (this is NOT an inverse fund), and it can hold as much cash as the managers choose to hold. Since ETFs are transparent, investors can see exactly what the managers are trading, and ETFs provide intra-day liquidity (the ability to trade based on midday prices versus a mutual fund that trades based on net asset value determined at the end of the day). HDGE has just under $200 million in assets as of September 30, 2017. Learn more at http://www.advisorshares.com/fund/hdge.

Goodbye style boxes, hello “Go Anywhere”! Great stock pickers don’t worry about style drift, benchmarking or placing their bets on too few stocks. Great stock pickers trust their guts. Good instincts come from experience, and trusting one’s instincts these days in a world of institutional measures, relative performance and style-drift fears, well, it rarely exists. Gone are the days where you could buy one fund with the goal of absolute performance. Is it any wonder that on average, active managers are lagging in performance behind passive, index-based strategies? Now it’s “well, congratulations, you didn’t lose as much as everyone else,” so “you win.” Is that really how it works?

Introducing: diversification. “Don’t put all your eggs in one basket,” uh-dah. So now you’re supposed to buy lots of strategies, and fit them together beautifully so that if one goes down, another goes up – this is called non-correlation. Don’t buy the same stuff, lower your overall risk, and create a ying/yang situation in your investment portfolio. Sounds great, but what happens when everything starts to seem correlated? The world is flat after all. Global stocks seem to all be moving together, to some degree. That’s where hedging comes in, and what’s a stock picker’s dream in hedging? A go-anywhere short (sell) strategy that benefits when the loser stocks they pick to “sell short” (without owning them), go down.

Anytime portfolio managers are doing organic company research, they uncover bad companies. These companies may have draining revenue streams, high costs, bad management, macro events driving poor results – whatever it is, identifying losers is half of a portfolio manager’s day’s work. So why not benefit from all that research? Why not exploit the other side of a trade? That’s where HDGE comes in.

HDGE is a go-anywhere, actively managed, exchange-traded fund (ETF) that shorts companies its managers identify as severely troubled stocks. HDGE has the flexibility to short stocks of $1 billion in market capitalization or greater, in any sector, without the use of leverage (this is NOT an inverse fund), and it can hold as much cash as the managers choose to hold. Since ETFs are transparent, investors can see exactly what the managers are trading, and ETFs provide intra-day liquidity (the ability to trade based on midday prices versus a mutual fund that trades based on net asset value determined at the end of the day). HDGE has just under $200 million in assets as of September 30, 2017. Learn more at http://www.advisorshares.com/fund/hdge.

 

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