Bright Futures

If you took a finance class in business school or college, your professor probably drilled into your head the "efficient markets" theory, which says that it's nearly impossible for an investor to beat the market in the long run. Well, business professors, take note: There is one mutual fund that's almost certain to prove those theorists wrong--Smith Breeden Equity Plus.

How does the fund do it? Its strategy is complicated, but in a nutshell, it takes advantage of market inefficiencies. The fund buys futures contracts that mimic the performance of the Standard & Poor (S&P) 500, an index of the 500 largest U.S. companies' stocks. The advantage of buying futures contracts rather than the individual stocks in the index is that futures don't require the buyer to pay the full amount owed until three months after the purchase date. This means a buyer has three months to invest that money elsewhere.