Washington Post – Schwab Hedged Equity Fund’s Vivienne Hsu bets on, and against, stocks according to ratings that her firm assigns. Otherwise, she might not own Payless ShoeSource Inc., the fund’ssecond-largest holding.
Payless, which operates about 4,600 shoe stores, amounted to 3.4 percent of Hedged Equity’s assets as of Jan. 31. Charles Schwab Corp. gives the stock its highest rating of A, equivalent to “strongly outperform,” under a system relying on criteria such as price-to-earnings ratios and cash flow.
“The last two pairs of Payless shoes I owned left my feet bleeding,” Hsu, 37, said. “I wouldn’t recommend the stock based on my experience, but it’s got a lot of good things going for it when you get down to it.”
Hsu beat the Standard & Poor’s 500-stock index during her two years at the $559 million mutual fund by relying on the ratings. In the past year, the fund ranked fourth of 24 U.S.-based mutual funds that can bet on lower-share prices and have at least $100 million in assets, according to data compiled by Bloomberg.
