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Rating:New Funds Hedge Downside Not Rated 3.0 Email Routing List Email & Route  Print Print
Friday, July 27, 2001

New Funds Hedge Downside

Reported by Sean Hanna, Editor in Chief

A sign of the times? Now that the Nasdaq is in retreat investors may be looking for more safe funds. Or so thinks The Toews Corp., the Philadelphia-based, registered investment advisory firm headed by Phillip R. Toews. The firm, which now manages $130 million in separate accounts, is set to open two mutual funds August 1. The enhanced-index funds will aim to sidestep losses in a stock market downturn while keeping the upside of a bull market. Both funds are based on indexes (Toews S&P 500 Hedged Index Fund and the Toews Nasdaq-100 Hedged Index Fund) and employ downside hedges.

Toews believes that there is demand for funds that protect investors from losses. "Typical investors aren't looking for astronomical gains or high risks," he says. "They typically seek a reasonable rate of return above inflation combined with protection against significant losses," he adds. "And that's what we aim to offer."

"There are currently more than 8,000 mutual funds in the marketplace, and the Toews Funds are among the first to develop an investment philosophy that attempts to offer downside protection," says Phillip R. Toews, CEO of the Toews Corp. and creator of the Toews (pronounced like "waves") Funds. "We want to give investors an easy way to own stocks while trying to provide them with downside protection," he says. "That's the key."

The two new Toews Funds are based on a proprietary system designed by Toews and is based on his observation that downturns come after minor falls in the market. When Toews sees a market turn the funds will purchase hedges to protect principal. The system unravels the hedge when the prices of stocks again begin to rise.

The funds are also a little different than most as they will come in both no-load and advisor sold flavors. Expenses in the no-load shares will be capped at 150 basis points while the advisor share class will carry expenses up to 250 basis points. Advisors will receive an annual payment of 100 basis points. The minimum investment in the fund is $10,000.  

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