Market Neutral Fund

AAA

DEFINITION of 'Market Neutral Fund'

An aggressive type of mutual fund that aims to deliver superior returns by balancing bullish stock picks with bearish ones. They can also generate income from the interest proceeds of the sales of short securities. The objective of these funds is to generate consistent returns that are at least three to six percent above the T-bill rate. These funds can also offer returns similar to leveraged ETFs which aim to deliver 200-300% returns on any given investment.

INVESTOPEDIA EXPLAINS 'Market Neutral Fund'

Market neutral funds are fairly complex products. They are also probably not appropriate for novice or conservative investors. These funds endeavor to offer a type of investing strategy that has been found chiefly in hedge funds and separately managed accounts. Market neutral funds tend to have fairly high fees as well as turnover, and investors should consider both these issues before investing.

RELATED TERMS
  1. 130/30 Mutual Fund

    A mutual fund that has long positions and short positions in ...
  2. Global Fund

    A type of mutual fund, closed-end fund or exchange-traded fund ...
  3. Equity Market Neutral

    A hedge fund strategy that seeks to exploit differences in stock ...
  4. Leveraged ETF

    An exchange-traded fund (ETF) that uses financial derivatives ...
  5. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected ...
  6. Market

    1. A medium that allows buyers and sellers of a specific good ...
Related Articles
  1. Insurance

    Consider Prime Rate Funds For More Income

    These funds may give you the reliable stream of income you need when you're retired.
  2. Options & Futures

    Do Money-Market Funds Pay?

    This investment provides security, but its returns may not be adequate for long-term investors.
  3. Investing

    How To Invest Outside Your Comfort Zone?

    Sometimes, when it comes to investing, we have to step outside of our comfort zone and use investment tools to express a market view or specific outcome.
  4. Mutual Funds & ETFs

    How To Apply Technical Indicators To Mutual Funds

    Mutual funds do not readily lend themselves to technical analysis, but investors can use common indicators to evaluate mutual funds as easily as stocks.
  5. Mutual Funds & ETFs

    How To Choose The Right ETF?

    Choosing the right ETF really isn’t that complicated. If you stay focused on a few key areas, you may find the experience to be much easier.
  6. Chart Advisor

    ChartAdvisor for March 27 2015

    A weekly technical summary of the major U.S. indexes.
  7. Chart Advisor

    Is Now the Time to Invest in North America?

    Bullish chart patterns across the North American markets suggest that now might actually be a wise time to allocate closer to home.
  8. Mutual Funds & ETFs

    Want to Go Long Natural Gas? Eye the UGAZ ETN

    Is UGAZ the best way to play natural gas? Maybe not.
  9. Mutual Funds & ETFs

    How ETF Arbitrage Works

    ETF arbitrage brings the market price of ETFs back in line with net asset values when divergence happens. But how does ETF arbitrage work?
  10. Mutual Funds & ETFs

    Want Emerging Market REIT Exposure? Eye These ETFs

    It's possible (and easy) to invest in emerging market real estate from the United States — just look at these REIT ETFs.

You May Also Like

Hot Definitions
  1. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  2. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  3. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  4. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  5. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  6. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
Trading Center