While investment universes of the equity focused funds differ, they generally share the same two-step investment process:
- Stock Selection: Invest in a diversified portfolio of equities that the Advisor views as demonstrating some combination of favorable valuation, market action and financial stability.
- Variable Market Exposure: Align the Funds’ exposure to general market fluctuations with the expected market return/risk profile estimated by the Advisor, classified based on prevailing market conditions. The goal is not to forecast specific market outcomes. Rather, the goal is to increase exposure to general market fluctuations in conditions that have historically been associated with favorable estimated market return/risk profiles, on average, and to reduce (“hedge”) exposure to general market fluctuations in conditions that have historically been associated with unfavorable market outcomes, on average.
Fund Ticker Primary Investment Universe Potential Market Exposure Long Term Benchmark1
Hussman Strategic Growth HSGFX Equities that trade on the major domestic exchanges, with a combined focus on valuation and market action. Fully-hedged (typically using long put/short call index option combinations, which may include the use of differing exercise prices), with the ability to use index call options to leverage the amount of stock controlled by the Fund to as much as 150% of the value of the Fund’s net assets2 S&P 500 Index
Hussman Strategic International HSIEX Equities primarily issued by companies in developed countries, with a combined focus on valuation and market action. Fully-hedged to 100% invested MSCI EAFE Index
Hussman Strategic Value HSVLX Equities that trade on the major domestic exchanges, with a combined focus on value and dividend income Fully-hedged to 100% invested S&P 500 Index
The exposure of Hussman Strategic Total Return Fund to each asset class within the Fund’s investment universe is generally aligned with the Advisor’s estimate of the expected return/risk profile for that asset class, classified based on prevailing market conditions.
Fund Ticker Primary Investment Universe Long Term Benchmark1
Hussman Strategic Total Return HSTRX U.S. Treasury Securities and Investment Grade Fixed Income (70-100%)
Fixed Income Alternatives (0-30%):
Precious metals shares
Utility & energy shares
International fixed income and currencies
Real estate investment trusts
Barclays U.S. Aggregate Bond Index
1The Funds make no effort to track or replicate the exposures of the benchmarks, particularly over limited segments of a complete market cycle. The benchmarks serve as long-term performance gauges.
2When the Advisor’s estimate of the expected market return/risk profile is strongly unfavorable, the Fund (HSGFX) has the ability to fully hedge its portfolio, potentially raising the strike prices of its index put options to a higher strike than those of short call options that may be used to hedge the portfolio. The Fund may experience a loss even when the entire value of its stock portfolio is hedged if the returns of the stocks held by the Fund do not exceed the returns of the securities and financial instruments used to hedge, or if the exercise prices of the Fund’s call and put options differ, so that the combined loss on these options during a market advance exceeds the gain on the underlying stock index. When the estimated market return/risk profile is strongly favorable, the Fund has the ability to leverage the amount of stock it controls to as much as 150% of the value of the Fund’s net assets, typically by investing a limited percentage of assets in long call options.