Summary

The MainStay Marketfield Fund seeks long-term growth of capital above that of the broader stock market, with lower volatility.

This alternative-style fund has a broad investment charter, allowing it to invest in stocks, bonds, commodities, futures, options and investment products such as exchange-traded funds. Additionally, with half its assets, the fund may use short selling to reduce stock exposure or to profit from an expected drop in the price of a given security.

As of February 04, 2015, the fund has assets totaling almost $9.14 billion invested in 123 different holdings. The fund typically includes a combination of long and short investments, tied to a global theme the subadvisors have identified. In addition, the fund may invest in both developed and emerging markets.

At the end of 2014, top equity holdings include overseas and U.S.-listed ETFs tracking sectors and regions. Equity holdings also include preferred shares and common shares of domestic and foreign companies. In addition, the fund may hold a large cash position.

In 2014, the fund significantly underperformed its Morningstar category, long-short equity. Managers use a macroeconomic, top-down approach to select investments, and have increased non-U.S. exposure in recent years. Investments are concentrated in the fund, and managers tend to focus on a few key macroeconomic themes, which means both elevated returns on good calls but higher downside risk if a given strategy fails to produce returns.

The fund was created by Marketfield Asset Management in 2007, and sold to New York Life’s MainStay Investments in October 2012. Marketfield remains onboard as the subadvisor.

The fund has returned -13.53 percent over the past year and 4.17 percent over the past three years.

The fund outperformed other long-short funds in the 2008 financial crisis. In addition, managers’ forecasts about an emerging-markets slump worked out well, as the fund exited those positions early. The fund also capitalized on a rebound in Europe in 2012. However, some of its U.S. investments have not panned out as expected.

One of the fund’s objectives is to use its hedging style to keep volatility lower than that of the broad equity market. Managers expect that the fund’s correlation with equity markets may vary.

“It also tries to balance risk by keeping correlations in mind, but that process seemingly ran off-kilter in 2014 when its themes went down in concert,” Morningstar says.

The fund has returned 5.95 percent over the past five years and ((UNHANDLED FORMAT TYPE: percents, NoneType for None)) over the past decade.

Investment Strategy

The fund attempts to provide returns on capital that substantially exceed the risk-free rate, rather than matching any particular index or external benchmark. To accomplish that, managers use long-short strategies, as well as various asset-class investments. Manager Michael Aronstein and Marketfield CEO Michael Shaoul make investment selections based on macroeconomic themes.

Role in Portfolio

As alternative funds are often uncorrelated with the broader equity markets, they may smooth returns and mitigate risk. Morningstar considers this fund a “core” holding.

Management

Marketfield’s Michael Aronstein has managed the fund since its inception in 2007, the same year Marketfield Asset Management was founded. Marketfield CEO Michael Shaoul, who holds a doctorate in accounting and finance, also plays a large part in investment selection. Aronstein and Shaoul have worked together since 2004, when both were with macroeconomic research firm Oscar Gruss & Son.

Marketfield sold the fund to the MainStay unit of New York Life in 2012, but it continues to manage the fund as subadvisors.

Performance

The fund has returned -13.53 percent over the past years, 4.17 percent over the past three years, 5.95 percent over the past five years and ((UNHANDLED FORMAT TYPE: percents, NoneType for None)) over the past decade.