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Broadmark Asset Management’s Ricardo Cortez on how investors can use the strategy of hedge funds to boost their portfolios.
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All right -- hedge funds are seeing average returns below that -- the -- some pace so far this -- but.
One strategist is designing his mutual fund -- to the investing style.
Of a hedge fund.
Is Ricardo Cortez the senior portfolio management specialist at -- mark asset management to tell us how this works -- We -- mimics the way -- hedge fund works had to you do that.
But we were -- hedge fund we were hedge fund from 2001 to 2009.
And in 2009 and became evident that people -- of liquidity transparency they wanted you to you register with the Securities and Exchange Commission.
Better tax reporting so what we did is we opened a mutual fund which can be 100% long.
100% short and we can be fully in cash and with an all those things over the last few years.
So we have a long and short strategy would generally long or short the market we manage the exposure of the portfolio to the market.
It has to be beating both that you found -- in returns over the past -- does that concern you.
Eat it does not and I'll tell you why.
Our goal is to manage the risk of the portfolio it's it's the opposite.
Of the long only mantra long only manager buys and holds.
What we do is hedge the portfolio to make sure that we don't lose.
More than 10% over the last ten years we've never lost more than 10% high to low at any time so if you watch your downside.
The upside takes care of itself in a way for instance mathematically.
If you only lose 10% over time you only have to capture 13 of the upside to be the market.
So what's a winning by not losing.
Method of of investing what is your method right now our long -- -- short.
We use a combination of fundamentals.
And momentum driven.
Models.
-- right now we are fairly optimistic about the market valuations.
Are pretty reasonable.
The Fed it's putting money into the market and globally in China and in the ECB in Europe.
And the other thing is on -- sentiment basis everybody -- market nobody thinks the markets going up and hello everybody hates their rally and meantime it just continues to -- and getting used to grind higher and there's so much cash on the sidelines hedge funds you know.
Our.
Have a lot of cash.
Mutual funds have a lot of cash most people are standing back if this market goes up.
And and challenges the highs of the last few years.
Many managers have to catch up with those benchmarks they're behind right now.
We could see this market pop and so where we're fairly bullish on the market which funds he -- best right now.
Well right now we think we've been and investing and -- like the S&P 500 is an index we only invest in indexes.
But right now we see technology coming on we see.
Emerging markets beginning to pick up.
And I think the jury still out on this but may be small capsule come back to we we think we're gonna see a broadening of the market into.
The more.
The more aggressive sectors of the market and that's what we think is gonna happen -- the next month or so.
Well year to date small -- Russell 2010%.
And up 52 weeks up 25% so what do you mean coming back and they look like -- got a pretty well well if we see if we see this week.
This pop.
They could do a lot better than that I mean -- -- up I think we're up about five or 6% for the year right now.
If the market really pops we could see it.
You know a larger a larger -- The thing is we believe on -- long term basis the market is probably stuck within this trading range -- and even if we make a new high on the market.
We think that there could be trouble ahead perhaps later this year next year and that's when.
It comes in handy to be able to raise so much cash -- and to be able to go short which we can do quite arrogant Ricardo Cortez April -- asset management thank you so much for being hit great thing.
