The mission of the Hussman Strategic Growth Fund is to “outperform the broad stock market over complete market cycles…but seeks to limit its downside risk using derivatives, such as options on broad market indexes,” according to a recent article in The Wall Street Journal.

John Hussman, manager of the fund, was successful in insulating investors to some degree earlier in the 2000s, the article says, “but it hasn’t helped through the long bull market.” Still, Hussman is standing his ground, notwithstanding recent lackluster performance and a corresponding investor exodus. Over the past fifteen years, says WSJ, the fund has declined by an average of about 2.1% per year, versus its average peer which has seen a 2.3% gain. As a result, the fund has shrunk from $6.7 billion at its peak in September 2010 to $360 million, and the article reports that the “contraction has been steady since.”

Todd Rosenbluth, director of research and data analysis provider CFRA, explains, “Having lost money each year since 2011 and charging more than 100 basis points to do so tends to cause investors to ask for their money back.”  Still, Hussman is sticking to his guns, arguing that current low interest rates don’t justify the market’s stretched valuations. “In a world where economic growth will likely struggle to break 2% annually in the coming years, investors should realize that when interest rates are low because growth is also low, no valuation premium is justified at all.”

Rosenbluth argues, “He believes the market is overvalued, and he’s staying by that conviction. There may be people who would agree that the market is now trading at a higher level than it has historically, but that doesn’t mean it’s going to stop.”