Seeking Alpha

Efficient Alpha's  Instablog

Efficient Alpha
Send Message
Efficient Alpha provides written content & investment research solutions for small and medium-sized advisor firms. Our core products include: financial newsletters, blogging, presentation preparation, investment research and ghost writing. Our normal clientele are small to medium-sized firms... More
My company:
Efficient Alpha
My blog:
Peer Loans Online
  • You can now Invest in Your Cynicism of the Government! 0 comments
    Aug 25, 2011 7:46 PM | about stocks: GVI, HDGE
    By Joseph Hogue, Efficient Alpha

    Having left my ideological days behind, I consider myself a political agnostic. If you still have faith that the talking heads in Washington will do the right thing, then I suggest you take a look at Standard & Poor’s reasoning for lowering the credit rating of the United States from AAA. It has long been a dream of mine to somehow invest based on my cynicism of the government, and now I can do just that thanks to Eric Singer and the team at the Congressional Effect Family of Funds.
     
    The Congressional Effect Fund (CEFFX) moves assets to cash while congress is in session and then into S&P500-mimicking futures and funds when congress is out. The rationale behind the fund, and yes there is an element of rationale, is that political uncertainty reduces stock returns and is highest while politicians are deciding what to do with your money. After rules and regulations have been passed, companies are free to maximize shareholder wealth without undue political ambiguity.
     
    The fund was established in 2008, but has yet to find an audience. It is currently up just 3.4% from its May ’08 starting price of $9.40 and reached its peak of $10.41 in May of this year. Since Congress is only in session about 150 days per year, the fund is held in cash for the majority of the time.
     
    While holding the fund would make hilarious dinner party conversation, which alone may be worth shelling out ten bucks, it may be no more than a fad play on public sentiment. I am not wild about the fund’s assets only earning a cash return for the majority of the year. I would much rather it invest in something with a low market correlation like the iShares Barclays Intermediate Government/Credit Bond ETF (GVI) or the Advisorshares Active Bear ETF (HDGE). Both funds have outperformed the CEFFX and the broader market over the since 2008. The CEFFX has actually outperformed the S&P500 since its inception by 4% on an annualized basis, but the period was not a full business cycle and certainly not typical.


    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Themes: ETF Analysis Stocks: GVI, HDGE
Back To Efficient Alpha's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.