Rydex on a Wild Ride in '98

By Will McClatchy, Editor

Rydex is proof that smaller index fund groups can still thrive. Securities Data Publishing rated it the fastest growing fund family in 1998, during which time it grew from $1.7 Billion to $4.1 Billion under management. It achieved this by bringing out creative, flexible products to give indexers a variety of ways to play large cap markets.

"We are the only firm out there that identifies with and is appropriate for all four basic investment disciplines: market timing, tactical asset allocation, strategic asset allocation, and sector rotation," said Rob Steele, vice president for marketing and product development. Rydex is used by 600 registered investment advisors as well as institutional and retail investors.

Rydex leaves the plain vanilla index fund to others, preferring to concentrate on a variety of innovative twists to indexing. Founded in July of 1993, Rydex began with the Nova Fund, an S&P fund with beta of 1.5 (or 150% participation) that gave market timers the opportunity to leverage a bull market easily. "We cut our teeth on market timers," said Steele.

Since then the firm has come out with a total of 22 funds. They include the Ursa Fund, which provides the inverse of the S&P 500 for true bears, and the U.S. Government Bond Fund, which gives investors 120% participation in Long Treasury Bonds,

The firm's funds can handle frequent trades because it does not only take simple long positions in indexes. Commonly it will add future contracts to give it flexibility. In the OTC Fund, for instance, it buys a basket of stocks representative of the Nasdaq 100 and overlays a variety of option contracts. Naturally it also offers an inverse Nasdaq 100 fund, the Arktos Fund.
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