Long/Short Equity Funds: The Best And Worst Of December

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Includes: CIAAX, FMLSX, GURAX, KZSIX, SLSAX, SSPLX
by: Brian Haskin

Long-Short Equity Funds The Best and Worst of December Long/short equity mutual funds and ETFs posted average returns of -1.23% in December, making it the third time in four months that the average fund in the category failed to post positive returns. This compares to a return of -1.58% for the S&P 500 Index and -5.02% for the Russell 2000 Index. The three top-performing long/short equity funds had monthly gains ranging from 1.74% to 2.01%, while the worst performers suffered losses of at least 5.65%.

Top Long/Short Performers in December

The three best-performing long/short equity funds in December were:

KZSIX led all long/short equity funds in December with one-month gains of 2.01%. The $160 million fund launched on August 3, 2015, and thus did not have one- or three-year returns available, but its three-month returns through December 31 stood at +3.40%, ranking in the top 26% of the category.

GURAX, with $106 million in assets and an inception date of March 2014, was December's second-best long/short equity fund, in terms of returns, as it gained 1.88% for the month. The fund's 3.59% gains in 2015 ranked in the top 12% of the Morningstar long/short category.

Finally, SSPLX's 1.74% gains in December ranked third among long/short equity mutual funds. The $22 million fund, which launched in October 2014, returned +0.47% in 2015, ranking in the top 31% of Morningstar's Long/Short Equity category.

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Worst Long/Short Performers in December

The three worst-performing long/short equity mutual funds in December were:

CIAXX, which returned -7.33% in December, was the category's worst performer for the month. The $5 million fund launched on October 28, 2010, and through the end of 2015, its three-year returns stood at an annualized -4.70%, giving it a 1.43 beta (relative to the S&P 500) and -23.87% alpha for the three-year period. Its three-year Sharpe ratio stood at -0.15, with a standard deviation of 19.28, compared to respective category averages of 0.68 and 7.92.

SLSAX lost 6.01% in December, making it the month's second-worst-performing long/short equity mutual fund. The $63 million fund launched in December 2013 and returned -14.24% in 2015, ranking in the bottom 5% of the category.

And the $644 million FMLSX, which lost 5.65% in December, rounded out the category's bottom-three performers for the month. It launched way back in 2003 and generated 10-year annualized returns of +3.85% through the end of 2015. Over the past three years, however, FMLSX has lost an annualized 0.89%, ranking in the bottom 8% of its category for that time, with a beta of 0.79 and -12.03% alpha. Its three-year Sharpe ratio and standard deviation stood at -0.04 and 10.41, respectively.

Past performance does not necessarily predict future results.

Jason Seagraves contributed to this article.