Current market volatility notwithstanding, the economic expansion that began two years ago is still rolling, according to Rob Stein, manager of the Astor Long/Short ETF Fund Ticker:(ASTRX).
“The pace is definitely waning and we've definitely hit a speed bump,” he said. “But we're focusing on getting the direction right.”
Mr. Stein, founder of $1.4 billion Astor Asset Management, said he has a diverse long bias in his fund, which invests in exchange-traded funds.
The long side of the portfolio includes exposure to technology, health care, energy and financials, as well as commodities and fixed income.
“We're sort of fundamentally economic driven,” Mr. Stein said. “We only have to decide if the market is conducive to going up or down.”
In managing the fund of between 15 and 20 ETFs, he analyzes market data including employment trends, gross domestic product numbers, inflation, interest rates and relative momentum by sector.
Mr. Stein has been running the strategy as a separate account for 11 years, and it was launched as a mutual fund in October 2009.
Over that period, the strategy has had just one down year, a 3.5% decline in 2008.
He manages the fund around four broad economic cycles: expansions, peaks, contractions and troughs.
During the contraction cycle of 2008, the fund weathered much of the downturn that saw the S&P 500 Index fall by 28% by going into a defensive position.
The fund's general exposure during the financial crisis was 20% inverse equities, 50% cash and fixed income, 15% non-equity ETFs such as commodities, and 15% low-correlation equity ETFs, such as utilities.
The fund, which has been essentially flat from the start of the year, gained 8.3% last year, which compares to a 2.8% average gain for the large-blend category as tracked by Morningstar Inc.
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