While others are liquidating funds, Guggenheim is actively putting new product into the market and breaking new ground as it does so. The Guggenheim Market Neutral Real Estate Fund (GUMNX) debuted on February 26, making it the first market neutral mutual fund focused exclusively on real estate. But this isn’t Guggenheim’s first market neutral rodeo.
Leverage Existing Capability
Guggenheim’s new market neutral fund leverages the firm’s experience in managing market neutral real estate portfolios, as that is a component of their long/short real estate fund, the $106 million Guggenheim Risk Managed Real Estate Fund (GURAX). That fund, which launched in March 2014, dynamically allocates assets between a long-only real estate portfolio and a market neutral portfolio. The two portfolio managers on the Market Neutral Real Estate Fund, Jayson Flowers and Thomas Youn, CFA, are also portfolio managers on the Risk Managed Real Estate Fund.
The fund’s stated objective is to provide investors with capital appreciation while limiting exposure to general stock-market risk. In pursuit of this objective, the new fund employ a fundamental long/short real estate strategy seeking balance between its long and short positions in REITs and other real-estate equities (including ETFs) resulting in less volatility than the broad stock market. The fund’s net market exposure is normally expected to be close to zero. This approach seeks positive returns that are neutral with regard to stock-market risk.
The management fee for the fund is 1.10%, and shares of the fund are available in the following classes, each listed with their ticker symbols, net-expense ratios, and initial minimum investments:
- A (GUMAX): 1.65%, $2,500
- C (GUMCX): 2.40%, $2,500
- Institutional (GUMNX): 1.40%, $2 million
- P (GUMPX): 1.65%, (none for qualifying buyers)
Other Long/Short Real Estate Funds
Also in the long/short category, Altegris offers a real-estate focused long/short fund, the Altegris/AACA Real Estate Long Short Fund (RAAAX), that was converted from a hedge fund in January 2014. The fund’s track record as a hedge fund dates back to 2011. One main difference between the Guggenheim Risk Managed Real Estate Fund and the Altegris fund is that the Altegris fund is managed as a unified long/short portfolio. Both funds allocate to REITs and other real estate related securities.
Past performance does not necessarily predict future results.
Jason Seagraves contributed to this article.