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. Equity Market Neutral

    A hedge fund strategy that seeks to exploit differences in stock ...
  3. Global Fund

    A type of mutual fund, closed-end fund or exchange-traded fund ...
  4. Market

    1. A medium that allows buyers and sellers of a specific good ...
  5. Mutual Fund

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

    An exchange-traded fund (ETF) that uses financial derivatives ...
Related Articles
  1. Consider Prime Rate Funds For More Income
    Insurance

    Consider Prime Rate Funds For More Income

  2. Do Money-Market Funds Pay?
    Options & Futures

    Do Money-Market Funds Pay?

  3. Foreclosure Opens Doors For Real Estate ...
    Home & Auto

    Foreclosure Opens Doors For Real Estate ...

  4. A Guide To Key ETFs Investing In South ...
    Mutual Funds & ETFs

    A Guide To Key ETFs Investing In South ...

comments powered by Disqus
Hot Definitions
  1. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  2. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  5. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  6. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
Trading Center