Fund That Focuses On Investing When Congress Is Not In Session Cites Performance Of Sticking To Discipline Over Time

Wednesday, October 31, 2012 19:21
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Fund That Focuses On Investing When Congress Is Not In Session Cites Performance Of Sticking To Discipline Over Time

Tags: Congress | mutual funds | S&P

An advisor who has made a point of studying the relationship between investing in equities and Congressional accomplishments has started a fund designed to exploit that relationship.

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Eric Singer says the best time to invest is when Congress is not in session. His Congressional Effect Fund (CEFFX) does exactly that.
 
Since May of 2008, the fund has followed a disciplined strategy of holding cash when Congress is active, then adding to positions in the S&P 500 during Congressional recesses.
 
Whether the strategy works doesn’t seem as important as giving investors the feeling that they are investing in a disciplined fashion as well as sticking it to politicians indirectly by putting their
money where their disagreements are.
 
The fund has returned an average annual rate of 1.6%, lagging the S&P’s average annual return of 2.9% over the same period. Singer says that over time, the strategy should not have a significantly down year and should come close to the performance of the S&P.
 
Singer has written a book published by John Wiley & Sons Inc. detailing various effects of Congressional sessions on the equity markets.
 
Interestingly, the S&P’s average annualized rate of return during the days Congress was in session over the 7900 trading days since 1965 through 2011 was less than 1%.
 
Over the 4100 days when Congress was on recess over the same 47-year period, the average annual rate of return was 16%.

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