Dec. 3 (Bloomberg) — Do you or your clients love the low fees that index-based mutual funds provide, but you’re tired of the same old boring strategies? Want to spice things up with more exotic trades like the pros in the hedge-fund industry?

If so, there is a mutual fund and annuity that are perfect for you! Van Eck Global has launched what it calls the first mutual fund that promises “access to the risk and return profile of an index of long/short equity hedge funds.” There’s also a similar strategy available in a MetLife Inc. annuity.

And just like the majority of hedge funds this year, the index offered the opportunity to get drastically outperformed by the same old boring strategies. The Market Vectors Global Long/Short Equity Index returned 2.6 percent including dividends this year through yesterday, compared with 14 percent for popular funds that track the Standard & Poor’s 500 Index. In fact, the S&P 500 handily beat the long/short index for the past five years with the exception of 2011, when it was almost a draw.

Don’t stop reading now, however, especially if you’re the type who believes a bear market is right around the corner. The long/short index only lost 12 percent in 2008, which was 25 percentage points better than the S&P 500. It also won by about 2.1 percentage points in 2007 and 2005, but lost in 2006 and its first full year, 2004. All told, the long/short index returned 120 percent from inception through the end of November compared with 147 percent for the S&P 500.

Six Trades

Alas, the long/short index wasn’t around for the dot-com bubble so there’s no way to know if a second bear market would be enough to put it on top in the longer term.

What’s interesting about the index is how few trades Market Vectors has determined are needed to reflect the collective wisdom of the hedge-fund industry. The index provider’s website lists six positions in exchange-traded funds, dominated by a 46.1 percent weighting in Treasury bills, presumably dry powder that could be deployed in the event of a stock-market dip.

Its biggest long trade in stocks is a 27.8 percent weighting to the iShares S&P 500 Value ETF. After that is junk debt, with 20.9 percent allocated to the SPDR Barclays Capital High Yield Bond ETF. After that, it gives a 20.8 percent weighting to small-cap growth stocks tracked by the iShares Russell 2000 Growth Index.

Short Trades

It’s short the toothpaste and soda-pop makers in the Consumer Staples Select Sector SPDR Fund to the tune of 14.1 percent of the index. And its other short position is a 1.4 percent bet against the ProShares VIX Short-Term Futures ETF (the one with the fun ticker “VIXY”), which is actually more of a long trade on the equity market.

Van Eck makes no secret of the fact that the hedge fund strategy in index-based mutual fund clothing is being introduced in an attempt to capitalize on recent backlash against hedge funds, which are closing at the fastest pace since 2009 as poor returns don’t justify their fees. (Operating expenses for the Van Eck Long/Short Equity Index Fund are 1.1 percent.) The exit from the alternative investments by the California Public Employees’ Retirement System has added to the scrutiny, the firm said.

“This launch is timely given the rising concerns about high fees and the variability of returns associated with individual hedge fund strategies,” Marc Freed, a portfolio manager who worked on the index at fund-of-funds company Lyster Watson, said in the statement announcing the launch.

Bottom line, if you want to invest in spicy strategies getting clobbered by those boring index-based mutual funds, you might as well do it for lower fees.

To contact the reporter on this story: Michael P. Regan in New York at mregan12@bloomberg.net

To contact the editors responsible for this story: Jeff Sutherland at jsutherlan13@bloomberg.net Jeremy Herron