We asked 6 chief equity strategists to break down the hottest trends in the stock market right now — and where you should be putting your money
Lamensdorf's services come at a price: The expense ratio on HDGE is about 2.7%, much higher than many of the low-cost ETFs that are exploding in popularity. He attributes about 200 basis points to the broker fees associated with borrowing shares for short sales, and about 150 basis points in management fees.But this yardstick comes with an important caveat: HDGE is not designed or intended to be used as part of a long-term, buy-and-hold strategy like an S&P 500 index fund.
That's why Lamensdorf recommends fund managers use HDGE as a 5% to 15% layer on top of an existing portfolio of equities, depending on how aggressive a hedge is needed at the time.
For example, HDGE emerged 3% ahead of the market in 2018 while the S&P 500 declined on an annual basis for the first time since the recession. And, over the last five years, it has slumped 11% on an annualized basis, besting the typical bear-market fund, which lost 17% over the same period. But not everyone who uses HDGE is a market bull with a contingency plan. According to Lamensdorf, some traders simply want to make a directional bet that stocks will fall. One common way to do this is through an ETF that's designed to mirror an index like the S&P 500 or the CBOE Volatility Index (
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