The ability to call the tops of bull runs in the stock markets and the bottoms of bear markets isn't particularly important to Mike Hurley.
Far more important, says the founder of a young mutual fund headquartered in Reno, is the ability to react quickly after a key market move and position the fund to ride trends as they develop.
Hurley, a veteran Wall Street technical analyst, quickly got an opportunity to show his stuff after he began putting investors' money to work in his Fusion Global Long/Short Fund on Sept. 28. That was just a few days before the S&P Index reached a top and began its long grind downward through the winter.
Down markets aren't a concern for Hurley.
The Fusion Global Long/Short Fund is one of a handful of mutual funds less than 1 percent of the 20,000 funds sold in the United States that are structured to take advantage of falling as well as rising markets.
Hurley, the fund's portfolio manager and its only full-time employee, uses a proprietary system he developed to follow trends in the stock, bond and commodities markets, as well as the trend of the U.S. dollar.
The fund buys only exchange-traded funds funds that track an index, but trade like a stock and Hurley's system directs him whether to be long or short in each of the asset classes in which the fund invests.
Hurley, who earned designation as a Chartered Market Technician, doesn't pay any attention to individual stocks and doesn't undertake any fundamental analysis of individual companies. Instead, he believes that the overall direction of stock, bond and commodities markets carry far more importance than the performance of individual issues.
The rap on similar long/short funds in the past has been that they tend to produce results that are neutral because they don't fully catch the wind of either up- or down-moving markets.
From its late September inception through April 30, the fund reported a 1.03 percent decline compared with a 8.2 drop in the S&P 500 Index in the same time. In the first quarter of this year, the fund squeezed out a 0.75 percent gain as the S&P 500 declined by 9.4 percent.
Investors have placed about $15 million in the no-load fund, which sets a $10,000 minimum investment for taxable accounts and a $2,500 minimum for tax-deferred accounts. Annual operating expenses are 2.08 percent.
Hurley and his partners in the fund's advisor, Fusion Asset Management LLC Greg Christian and Andrew Corradetti are hoping that the Fusion Global Long/Short Fund is only the first in a family of mutual funds.
"We do see tremendous potential for growth for these types of funds as their strategies and structural advantages become more understood by investors and their advisors," says Hurley.
But for the moment, the company's executives are more interested in building a good performance record than they are supercharging their growth.
"We have launched with our most conservative model," Hurley says.
A graduate of the University of California, Santa Barbara, and a U.S. Navy pilot during Operation Desert Storm, Hurley worked as chief technical strategist for E*Offering and Sound View Technology Group in the Bay Area until early 2002, when he moved to Reno, the city where his wife had grown up.
After a couple of years as an independent researcher and analyst, he hooked with with M.S. Howells & Co. as chief technical strategist before launching Fusion Global.
