Hedge Fund Strategy in Mutual Fund Format

Michelle Lodge
Thursday, 24 Jun 2010 | 1:42 PM ET

To make money now, Cliff Asness told CNBC Thursday, his firm, AQR Capital Management, offers the public two options: One is a hedge-fund-like strategy in a mutual-fund format and the other is based on trends, a type of managed-futures alternative.

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“You try to put together things so that you own some things and you short some things—a strategy that can make money in either direction,” said Asness, his company’s co-founder. He talked with CNBC at the Morningstar 2010 Investment Conference in Chicago.

The hedge-fund-like strategy—often called an arbitrage strategy—and doing things like convertible arbitrage or merger arbitrage, is what’s viable in today's market, which appears to be moving sideways at times, added Asness.

About the second type of fund, Asness said, it does okay in normal times and “very well when crazy things happen.”

Dan O’Keefe, of Artisan Global Value Portfolio, recommended two stocks, American Express and Signet Jewelers .

O’Keefe said Amex has done well in the recession and come out of it even stronger.

“This is a business that has secular growth potential, in terms of its ability to benefit from the trend of converting paper-based payments to plastic-based payments,” he said. “So even if the economy doesn’t do particularly well, it’s a business that can still grow.”

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Signet, the owner of Kay and Jared jewelry stores that advertise heavily on TV, is besting its competitor Zale Corporation , said O’Keefe. He characterized Zale as “going bust.”

O’Keefe said Signet is growing its revenue and expanding its profit margin and has the potential to continue expanding even when the economy is struggling.

“It’s the best operator in the industry,” he added. “And it’s cheap.”


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