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What Investors Should Know about GATEX

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What’s GATEX’s approach?

The Gateway Fund – Class A (GATEX) takes a different approach to investment. Unlike traditional mutual funds, alternative mutual funds give retail investors access to modern hedge funds like market neutral, global macro, and arbitrage hedge funds. GATEX primarily uses the market neutral strategy to achieve its investment objectives. A market neutral strategy takes both long and short positions in various indexes or stocks to seek profit from both increasing and decreasing prices in one or more markets. In this series, we’ll provide a detailed analysis of GATEX’s investment strategy. GATEX’s benchmark index is the S&P 500 Index.

The above chart provides a historic performance comparison between GATEX and its benchmark at the end of 3Q15.

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GATEX versus the S&P 500 Index

As of September 30, 2015, GATEX underperformed the index in the long term. However, it performed better in the short term. The inclusion of low volatility stocks in GATEX’s portfolio helped the fund sustain its losses compared to the S&P 500 Index (VFINX). In addition, the fund’s market neutral strategy effectively reduced the market sensitivity and the fund’s correlation with the index.

GATEX’s background

Currently, GATEX is managed by Michael T. Buckius, Paul R. Stewart, and Kenneth Toft from Natixis Global Asset Management. The fund has a net expense ratio of 0.94%. This is 41% lower than a fund with similar holdings. The fund has an average dividend yield of 2.1%. It declares a dividend on a quarterly basis. The fund’s top holdings include stocks like Microsoft (MSFT), General Electric (GE), Amazon (AMZN), JPMorgan Chase (JPM), and Alphabet (GOOG).

In the next part, we’ll analyze the moving average trend and future estimates of GATEX’s top holdings.

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