Posts Tagged ‘S&P 500’

Congressional Effect Fund (CEFFX) Outperforms S&P, Celebrates Two Years

By Elizabeth Crum | 7:40 pm May 24th, 2010

This post has nothing whatsoever to do with Nevada so is nothing more than a personal indulgence on a subject of interest (and some amusement) to me.  It is not a PR plug or advice to invest.

Yesterday marked the two year anniversary of a new investment fund founded (by my friend Eric Singer) on the premis that you could consistently outperform the S&P 500 Index if you (1) bought and sold when Congress is adjourned and (2) did nothing when Congress is In.

I remember being quite amused when Eric first told me that the broad stock market historically performs significantly better on an annualized basis on days Congress is on recess compared to days Congress is in session.

And Eric’s fund has outperformed the broad stock market by avoiding the stock market when government is governing most.  Since its launch in 2008, the Fund has a cumulative return of +1.49%, as compared to the S&P 500 Index, which has lost -18.21% over the same time period.

A shareholder who invested with CEFFX on the first day the Fund launched has earned a small profit (a $10,000 investment would have grown to $10,149) as compared to a large loss ($8,179) if he had invested the same amount in the S&P 500.

This constitutes a CEFFX performance difference of +24.09% over the S&P 500, as follows:

Performance Since Inception (May 23, 2008*)…

Congressional Effect Fund S&P 500
Inception through June 30, 2008 +1.97% -7.81%
Inception through Sept. 30, 2008 + .10% -15.70%
Inception through Dec. 31, 2008 -2.19% -34.20%
Inception through Dec. 31, 2009 -4.11% -10.78%
Inception through Mar. 31, 2010 -0.05% -6.82%
YTD through May 22, 2010 +8.70% -1.71%

Expense Ratios–Gross 4.97%, Net 1.75%. The Congressional Effect Fund is a no-load Fund. The Advisor has agreed to maintain the Fund’s total annual operating expenses at 1.75% through 08/01/11.

As you can see, year to date, the Fund is up +8.70% as compared to -1.71% for the S&P 500 Index.  And during a  period when the S&P fell 34%, CEFFX lost only 2%.

Its current Morningstar ranking on year to date performance can be found here.

Eric says that the market’s volatile performance last week was a good example of why the Congressional Effect Fund approach has worked.

“The market was riveted with the riots in Greece, and speculation on whether the Euro would hold together,” said Singer.  “Added to this was news about elections around the country, and the announcement on Wednesday night that the “logjam” on financial reform had been broken and a new broad set of regulatory burdens would be imposed on the financial services industry.”

“While some reforms may be appropriate, when coupled with European instability caused by Greece, breaking the logjam on these new prospective laws was like adding hard rain to a set of conditions that caused a traffic accident,” he said.

“For the week…CEFFX outperformed the S&P 500 index by 4.67%,” he said.

Congrats to Eric for what looks to have been a good/clever idea.  I’ll be curious to see how the fund does when the economy rebounds and he is competing with the S&P Index in better times.