Crude oil prices hit a 13-year low in the mid-$26 range in January 2016. Prices then rebounded back to the $41 price level in April 2016. Bears argue the supply glut will continue to cap oil prices, while bulls argue that the Organization of Petroleum Exporting Countries (OPEC) will slash production to balance demand with supply. Conspiracy theorists feel prices are being manipulated artificially by Saudi Arabia to squeeze out counterparties such as Iran and various oil-producing countries. While the universe of bearish crude oil exchange-traded-funds (ETFs) is massive, actual pure-play bearish crude oil mutual funds are extremely limited: there's only one. Aggressive investors who feel that oil prices will resume the sell-off can consider several bearish mutual funds. Investors should be aware of the negative effects of compounding on inverse and levered mutual funds.

ProFunds Short Oil & Gas Fund Investor Class (SNPIX)

The ProFunds Short Oil & Gas Fund Investor Class ("SNPIX") seeks to inversely mirror the performance of the Dow Jones U.S. Oil & Gas Index by -1X for a single day. The $3.8 million reverse benchmark fund has generated an average annual return (AAR) of -11.13% since its inception on Sept. 12, 2005. This is the lone pure-play fund to short crude oil prices in the mutual fund asset class. The one-year performance was 10.38% compared to 0.24% of the Standard and Poor's (S&P) 500 Index performance, as of April 12, 2016. Investors must remain prudent when using this fund in a directional bet or as a hedge. The longer the fund is held, the worse the negative compounding effects can be. The fund is down 71.2% since its inception. The ProFunds Short Oil & Gas Fund Investor Class fund has a 1.74% expense ratio with a minimum investment of $15,000.

Grizzly Short Fund (GRZZX)

Crude oil prices have been tightly correlated with equity markets. Rising oil prices result in a rising S&P 500 and vice versa. Prudent investors who track this correlation may consider the Leuthold Funds' Grizzly Short Fund ("GRZZX"). The actively managed fund has returned -6.53% since inception in June 2000. The $217 million fund aims to inversely correlate performance with the benchmark equity indexes through active short selling. The fund was short an 11% weighting in energy and 8% weighting in the materials sector as of Dec. 31, 2015. This is roughly a 20% short allocation to the oil and gas sector. While this isn't a 100% pure-play short on crude oil, it is a play on the correlation between crude oil prices and the S&P 500, with many added benefits.

The most significant benefit is the neutralization of the negative compounding effect. This negative compounding effect has taken numerous investors in inverse oil and energy ETFs by surprise. Tracking the effects is an active endeavor for investors and limits the holding period before decay sets in. The Grizzly Short Fund is non-levered, non-indexed and isn't targeting performance on a one-day period like most inverse ETFs. This allows investors to hold the fund passively for longer periods of time without suffering as much price decay as an inverse and levered oil ETFs or bearish oil fund. This allows for a more comfortable hedge to a long energy and equities portfolio.

The diversification also tends to smooth out the performance. This becomes evident in the performance stats. The year-to-date (YTD) return was -2.04% versus the S&P 500 return of 2.55%, as of April 13, 2016. The one-year performance was 7.77% compared to the S&P 500 performance of 1.71%, as of April 13, 2016. The fund has a 1.55% expense ratio with no load. The minimum investment is $10,000 in a regular non-IRA account. IRA accounts have minimum required investments of $1,000.