Niederhoffer Trumpets Diversification Benefits As Returns Sag

Sep 10 2014 | 5:47am ET

Summer hasn’t been kind to R.G. Niederhoffer Capital Management, but the firm insists it is still offering investors something valuable.

The firm’s Diversified Program fell 1.6% in July and was flat last month. The $384 million fund is down 2% on the year. Niederhoffer’s $24 million Optimal Alpha Program, which is longer-biased than the Diversified Program, fell 0.6% in July and rose 0.3% in August. That fund is up 5.2% in 2014, ValueWalk reports.

Niederhoffer’s iHedge Inflation Protection Program, which has just $4 million in assets, has done much worse than both, dropping 5.8% in July, 6.5% in August and 22.9% on the year.

But Niederhoffer noted that the Diversified Program rose during the late July and early August market correction, adding 0.6% while the Standard & Poor’s 500 Index dropped 3.9%.

“If one is unwilling to make an all-in bet on a continued stock market rally, the only alternative is to consider ways of reducing long exposure, preferably in ways that have provided overall positive returns, as we have, rather than negative returns such as portfolio insurance,” the firm wrote.


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