You might consider BERIX if you haven't already. It and GLRBX are the two funds I have in that space. Looking back as far as 1991 periods of out performance have alternated. BERIX has performed slightly better overall but it has recently lagged. I suspect that is mostly due to its currently defensive 40% allocation to cash. Their August update said they have been patiently waiting for more volatility to show up....perhaps they are beginning to find some of that now...
http://www.berwynfunds.com/assets/BERIX-Monthly-Aug-2015.pdf

The problem is not about not looking at M* methodology. The problem is treating M* like God.

The fault dear Brutus, is not in our stars, but in ourselves? With so many people here taking pokes at M*, it doesn't seem like God gets much respect anymore.
As Warner Wolf would say, let's go to the videotape...

I think it is M* who confuses the issue by summarily categorizing most of what it does not understand as long/short as long as it sees some short in funds portfolio.

That sounds like a criticism of M*'s methodology - that it is misclassifying (methodolgy) due to lack of understanding.
What people give a pass to are other sites. Did anyone, anyone wonder about a single figure in the original article?
It talks about "38 products – mutual funds and exchange-traded – readily identifiable as long/short strategies".
There are at least 60 distinct pure equity funds that call themselves Long/Short (I'm excluding debt, real estate, and commodity funds.) To me, these all seem "readily identifiable". But let's treat the number 38 as gospel?
It uses performance figures over a period of a single month. Anybody else have a problem with that?
BTW, the four long/short funds it names are also classified as long/short by M*. So it's unclear whose classifications it is complaining about. It seems to have set up a straw man.

Fund prospectus says it will buy stocks it thinks will go up, and short stocks it thinks will go down is Long/Short.
Fund that says it will do L/S with equal Long to Short weighting is Market Neutral.
Fund that says it will short using part of its portfolio upto all of its portfolio if it believes market conditions warrant it, is Hedged.
Fund that says it will do WTF it wants using all of the above is Multi Alternative.

You seem to prefer to look at what a fund says, not what it does. M* used to do that, but realized decades ago that this was unreliable. Here's a 1999 academic paper that talks about misclassifications based on prospectus. It starts (on p. 2) by quoting M*'s old practice of relying on what the prospectus says. It then goes on to say that it found 50% of funds are misclassified this way. And that was back in the 1990s, when funds weren't nearly as complex.
What's your classification of HSGFX?
Hussman writes that the fund is never net short. Though that's not stated in the prospectus, the prospectus does say that " the most defensive position expected by the Fund will be a 'fully hedged' position in which the notional values of long and short exposures are of equal size."
That sounds like your Hedged fund. But the fund is also allowed up to 150% market exposure - hardly a hedging strategy by my definition or by yours. "The Fund will be fully invested or leveraged [under certain conditions] ..." and "the maximum exposure of the Fund to stocks ... is not expected to exceed 150% of its net assets."
However, that's just what the prospectus says. In reality the net stock exposure (inception through 2010) has hovered around 20%. (M* premium data) And since 2010, its beta relative to the market (S&P 500) has been negative, as low (large) as -0.53% (M* analyst report).
So there's what a prospectus says, and what a fund really does. Prospectus allows leveraging, while fund's market exposure never exceeds 20% or so. Prospectus bans negative market exposure, while fund acts like it's 50% short the market.
That does seem to suggest that funds, or at least this fund, can be misclassified if one only reads the prospectus. It pays to read at least the portfolio reports as well.

Dude, check out the latest Semi-Annual Report.
Fully three Royce funds are now changing their names. Some make sense because the old names never made sense (Royce Value Plus, for example...where was the "plus" under Chip Skinner's stewardship ? Perhaps the plus was in the 6 or so share classes/ticker symbols for the fund).
A handful of funds have new managers/co-managers.
Royce selectively includes or excludes performance criteria on its funds to put funds in the best light (for example, some funds have upside/downside capture ratios for past 1 years reported, others do not, but have past 5- and 10-year, one newer fund doesn't have even a 1 year even though its been around since 2011, Royce Micro-Cap Disovery, ever the laggard which has been around since at least 2004 has no upside/downside reported; same for Royce Value Plus, I mean, Royce Smaller Companies Growth). Some funds have trailing 1-, 3-, 5-, 10-year performance reported, others only have 5- and 10-year. Typos ? Perhaps, but Royce has done this type of thing before, most notably during the depths of the great recession.
Share classes galore ! Six for Royce Opportunity, Royce Smaller/Small-ish Companies Growth Fund (formerly Royce Value Plus), Royce Small Cap Value (formerly Royce Value) and Royce Pennsylvania, seven for Royce Total Return and Royce Premier, three for Royce Micro Cap. You'll be relieved, no doubt, to learn that Royce Micro-Discovery (which was once Discovery) which rarely beat the benchmark and seemed to have very low active-management value-add under Mr. Necakov, has retained its one share class (but has a new co-manager).
And...my personal favorite for some time now...Royce allows several funds to have 10% or more of their holdings in international stocks (and handful are at or above 15-20%), but still benchmarks against all-US indexes.
Same old shenanigans at Royce. If you can't find `em, grind `em. Feed the beast.

Through successive ownerships, the Acorn Funds have been allowed to operate w/o interference, and to pursue their own path. Robert A. Mohn's retirement at end of 2015 as chief domestic investment adviser for the firm, following Charles McQaid's reducing his role in day-to-day management, may have been the death knell for the funds. The PMs of ACRNX went through some difficult analysis to try to improve the fund's performance, and there was an uptick after that. CEFZX emerging markets was a bright star, then tanked this year.
Most of the owners did seem to be legacy owners; nobody under 60 attended the shareholders' meetings, but the open question period elicited info I would not have thought to pursue, such as the funds' not timing cash, and ACRNX hoping some of its holdings would be takeover targets.
The PMs' frustration with performance was obvious.
It was a great opportunity for me to go to a local event and learn something.

FYI: Value funds have trailed in 10-year performance their style counterparts in growth and core, which encompasses both growth and value stocks. They're also lagging their peers year to date.
Regards,
Ted
http://license.icopyright.net/user/viewFreeUse.act?fuid=MjA0MDMwMTc=
Enlarged Graphic:
http://news.investors.com/photopopup.aspx?path=webLV091015_1K.jpg&docId=770344&xmpSource=&width=1000&height=1063&caption=&id=770346

FYI: (This is a follow-up article0
Regards,
Ted
http://www.mfwire.com/common/artprint2007.asp?storyID=52597&wireid=2
M*: Calamos Open-End Funds:
http://quicktake.morningstar.com/fundfamily/calamos/0C00001YQ6/fund-list.aspx
Calamos Closed-End Funds:
http://www.calamos.com/FundInvestor/ClosedEndFunds/

@Sven: This is a subscription article, so it order to read you must click on article title at top of Google search.
Regards,
Ted
https://www.google.com/#q=Target-Date+401(k)s+Get+a+Taste+of+Hedge+Funds+wsj
P.S. Might I suggest that in the future you let the Linkster do the heavy lifting !

Beware what is in your target date funds.

The trend is mainly apparent among smaller players—companies including Manning & Napier Inc., Principal Financial Group and AllianceBernstein LP—that are seeking to “differentiate themselves and find a place in a market that is dominated by just a few players,” says Lori Lucas, defined-contribution practice leader at investment consulting firm Callan Associates Inc.

Click on the WSJ link above.
wsj.com/articles/target-date-401-k-s-get-a-taste-of-hedge-funds-1442001842

http://www.sec.gov/Archives/edgar/data/709364/000094937715000317/e36935_roh-isi.htm
497 1 e36935_roh-isi.htm
The Royce Fund
Supplement to the Investment, Service, and Institutional Class Shares
Prospectus Dated May 1, 2015
Royce 100 Fund
(to be renamed Royce Small-Cap Leaders Fund effective September 15, 2015)
The Board of Trustees of The Royce Fund has approved the following name and related investment policy changes for Royce 100 Fund, to become effective as of September 15, 2015.
Royce 100 Fund
Royce 100 Fund will be renamed Royce Small-Cap Leaders Fund.
Principal Investment Strategy
The first and second paragraphs in this section are deleted in their entirety and replaced with the following:
Royce & Associates, LLC (“Royce”), the Fund’s investment adviser, invests the Fund’s assets primarily in a limited number (generally up to 100) of equity securities of small-cap companies with stock market capitalizations up to $3 billion. Royce selects securities of “leading” companies—those that in its view are trading at attractive valuations that also have excellent business strengths, strong balance sheets, and/or improved prospects for growth, as well as those with the potential for improvement in cash flow levels and internal rates of return.
Normally, the Fund invests at least 80% of its net assets in equity securities of companies with stock market capitalizations up to $3 billion at the time of investment. Although the Fund normally focuses on securities of U.S. companies, it may invest up to 25% of its net assets (measured at the time of investment) in securities of companies headquartered in foreign countries. The Fund may invest in other investment companies that invest in equity securities. The Fund may sell securities to, among other things, secure gains, limit losses, redeploy assets into what Royce deems to be more promising opportunities, and/or manage cash levels in the Fund’s portfolio.
Primary Risks for Fund Investors
The first sentence of the second paragraph in this section is deleted in its entirety and replaced with the following:
The prices of equity securities of companies with market capitalizations up to $3 billion are generally more volatile and their markets are less liquid relative to larger-cap securities.
The operations of the Fund will not change except as specifically described above.
September 11, 2015

As I've noted before, the guy seems problematic. Mr. Calamos's decision to reconfigure his executive team struck me at the time as unwise (see Gary Black as savior? Really?, September 2012) since he was bringing in a guy around whom lawsuits, controversy, and negative press swirled. Yesterday Calamos filed the following announcement with the SEC:
"Effective immediately, Gary Black will no longer be a member of the investment team managing any of the series of the Calamos Investment Trust other than the Calamos Long/Short Fund where he will remain a Co-Portfolio Manager. Accordingly, all references to Mr. Black’s position of Global Co-CIO and his involvement with all other series of the Calamos Investment Trust except for the Calamos Long/Short Fund shall be deemed deleted from the Summary Prospectuses, Prospectuses, and Statement of Additional Information of the Calamos Investment Trust. "
The Long/Short fund was Black's project before he joined Calamos. The press release merely says that Mr. Black "will transition from the firm by October 31, 2015." His bio now reads:
"Gary D. Black. Gary D. Black serves as a Co-Portfolio Manager as of September 2015. Between August 31, 2012 and September 2015 he was the Executive Vice President and Global Co-CIO of CALAMOS ADVISORS. Mr. Black served as Chief Executive Officer and Chief Investment Officer, and was a Founding Member of Black Capital LLC from July 2009 until August 2012. Prior thereto, Mr. Black served as Chief Executive Officer of Janus Capital Group from January 2006 through July 2009."
His fund, CALSX, seems to offer elevated volatility with average returns.
I've dropped Calamos a note, asking what led to the changes and what happens to CALSX after Halloween. Firm representatives, citing what they believe to be unprofessional behavior in our earlier coverage, are reluctant to provide additional comment now. That's understandable. The official word on the change is available at the Calamos website.
As ever,
David

Yet another take on the active/index issue:
http://news.morningstar.com/articlenet/article.aspx?id=714208

Regarding fund classifications (VF and Hank):
Well there you go again :-) Seems lots of people like to say that Fund A or Fund B is in the wrong category, so M* must be stupid, or M*'s misapplied its own methodology, or ...
May I respectfully suggest that people look at M*'s methodology for classifying long/short funds and market neutral funds. How do you feel these could be improved, or if you feel they should be thrown out, could you suggest different rules or even different categories that would reflect a better understanding of how these funds work? If it helps, here's a guide to all of M*'s alternative strategy categories.
Regarding HSGFX. It is indeed never net short. Which explains why it will never be considered a bear fund. But that doesn't preclude it from making extensive use of shorts, so long as the result is not more short than long.
As M* describes this fund in its Long/Short methodology paper, it makes extensive use of shorts to reduce or remove market risk. But those are synthetic shorts. It seems to be taking the market out of the equation by going long individual securities and shorting the entire market (net zero equity exposure). If it's made better selections than the market as a whole, it will go up in value else down, independent of market moves.
The latest fund report says that the fund is using these synthetic shorts (not in those words) to fully hedge the market. My guess is that may explain why the fund moved from Long/Short to market neutral. It may have gone from hedging some market risk to hedging virtually all market risk. M*'s methodology for market neutral requires these funds to have equity beta less than 0.3 in magnitude.
Vanguard appears to subsume equity market neutral funds (ones that balance longs and shorts) into long/short. Its paper regards them as just a subcategory of long/short where their net equity exposure is zero. M* in contrast seems to focus on market exposure level as the primary differentiator rather than a fund's strategy. Neither Vanguard nor M* does what that the original paper criticizes - calling long/short funds equity hedged funds. Vanguard even goes out of its way to talk mostly about long/short funds that are 100% net long.

Several of my favorite funds are mentioned on this thread, VHCOX which I've owned since 2001, and POAGX, since 2007. As you can imagine, they've both had some style drift as their assets have expanded...not that I'm going to complain too loudly though. Much less SC than before.
Bee...One of the funds I've recently purchased for my rollover IRA which I believe will be a nice complement to these 2, would be SCMFX. It is a small/mid blend, and if you do a performance comparison between that and POAGX, you will see a fairly even performance match until the biotechs powered the Primecap fund ahead over the last 2 years. SCMFX has been profiled on MFO, and it held up fairly well over the recent turmoil perhaps due to the additional value component.
Per your comment as well, I was also intrigued by the Eventide family, and have a starting position in ETNHX. More spice than my VGHCX holding, but I am thinking this is a lower risk way to get exposure to the biotechs than an individual holding, and I wanted to stay away from the ETFs.
press

A broad answer to @Edmund 's questions is that Long/Short funds are somewhat unconstrained funds, in that they remove (or lessen) the constraint on being long only. Just as with unconstrained bond funds, about which I made the same comment in another thread, removing constraints is a double edged sword. If a manager is skilled in the larger pool of investment choices, great. But few are.
See Crabbe Huson Special (1990s). (Link is to google search; Baron's article). Manager was then allowed to go short. M* quote: "This is a dismally failed experiment in shorting ... He's just not demonstrated that it's one of his strengths."
More generally, see this paper by Vanguard, discussing long/short funds from the perspective of perturbations from market indexes (what you'd expect from an index/quant house). Essentially, selecting some stocks (overweighting) is by definition a bet against the rest of the stocks in the market (underweighting). This is a perspective that holds regardless of whether shorting is allowed. What a long-only constraint does is limit the degree of underweighting (to a zero position, obviously)
Viewed from that perspective, shorting makes sense as an extension of an existing strategy, not something new. But it comes with the qualification, as noted in the paper (p. 16), that shorting has other quirks that make going long and short not as symmetric as one would like. One obvious difference is the risk of unlimited loss (vs. 100% for long positions). Another is that securities may not always be available to short. A third, which may not be in this paper, is that the execution costs for going short are higher than for going long.
All of these factors make managing short positions different from managing long positions. I don't think the difficulty in long/short funds is so much a matter of issue selection as it is dealing with the different nature of short positions, and fitting that into an overall strategy - that's the first part (but only the first part) of Edmund's question #3.

FYI: Q: Am I being cheated by ETFs?
A: Exchange-traded fund are billed as a great way for investors to save money on fees. That's true. But they're not free and there are costs investors need to be aware of.
Regards,
Ted
http://www.usatoday.com/story/money/columnist/krantz/2015/09/11/cheated-exchange-traded-funds-etfs/72013082/

POAGX. Midcap Growth. Hmmmm.
Mkt capitalization of holdings, as % of portfolio (6/30/2015):
Giant 9.40
Large 21.13
Small 27.44
Micro 15.73
///TOTAL NON-MC: 73.7% of POAGX portfolio///

FYI: Equal-weighted exposure to the S&P 500 for 30 basis points
Regards,
Ted
http://www.investmentnews.com/article/20150910/FREE/150919987?template=printart

Howdy,
Yeppers, happened after the crash in '29. If I recall folks pretty much avoided stocks until the war and later. Hell, my folks just passed in their mid-80's and they wouldn't ever buy a stock. CD's and Series EE. Oh, and don't even suggest it.
I worked with quite a few people in state gov't that exited stocks after the dot.com meltdown in 2000 and they've never gone back. '07-08 cost more players.
And in addition to the folks that have been permanently scared away, how about the 100's and thousands that got thrown under the bus and will never be able to AFFORD to own stocks . . . and never work a job that offers that option with a 401k. All those that were forced to redeem their 401 in an effort to avoid losing their house.
I think that we can safely assume that it will be a very thin market for a decade or so.
and so it goes,
peace,
rono

@prinx,
Thanks for the fund suggestion. I will check it out. Do you own their healthcare fund ETNHX?
Looks like both POAGX (33%) and ETGLX (22%) significantly overweight healthcare compared to the MG category (13%).
ETGLX (1.5% ER) has a bit of headwind compared to POAGX (.62% ER).
Both were recently created in 2010.

Its my understanding that stock market gyrations over the past 15 years have made millennials disproportionately reluctant to invest the stock market....even if they have the income and savings needed to do so. Another big near term dip in the market might be the nail in the coffin for many of them as far as considering stock market investing goes.