TheStreet.com Ratings initiated coverage of 27 stock mutual funds that accrued a sufficient track record of risk and performance data by the end of May 2011. Only two of these newly rated mutual fund earned initial grades in the ‘buy’ range.
Just one of the funds that opened for business in May of 2008 received our highest possible rating of A+, or Excellent. None performed better on a risk-adjusted return basis over the last three years than the Highland Long/Short Healthcare Fd A (HHCAX) rising 21.2% in a year and 12.4% annually over three years.
The fund seeks long-term capital appreciation and invests at least 80% of the value of its total assets in securities of companies principally engaged in the design, development, production, sale, management or distribution of products, services or facilitates used for or in connection with healthcare or medicine. The Highland Long/Short Healthcare Fund may also invest in preferred stocks, warrants, convertible securities, debt securities and other securities of any market capitalization issued by such companies.
Top holdings include 5.1% Genesys Ventures L.L.P. , 3.6% Caliper Life Sciences (CALP), 3.5% Keryx Biopharmaceuticals (KERX_), 3.5% CNS Response (CNS.OB), and 3.3% Cigna Corp (CI_) on the long side of the portfolio. These were balanced to reduce overall exposure to the sector with recent short positions in Becton Dickinson and Co (BDX_), Athenahealth(ATHN_), Cerner Corp (CERN_), Community Health Systems (CYH_), and Mettler-Toledo International (MTD_).
One drawback to the Highland Long/Short Healthcare Fund is the 5.92% net expense ratio and a 2% redemption fee should you sell your position within 60 days of purchase. Since the fund takes short positions and uses leverage there is an additional risk of loss as stocks rise in value….
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