Looking for low-cost counter-cyclical stock fund

What cycle are you trying to counter?

Have a look at some of the bear funds. Or try Hussman.

- Bear Funds - they go up, when the market goes down

- buying puts against the stock market - an expensive way to hedge

- invest in a low cost value fund such as one of the Vanguard Value Index funds. Historically, when stocks have gone down, value funds have tended to go down by less. This is probably because being value stocks, they tend to have a higher yield (more dividend income) and dividends tend to be pretty stable, even in bad markets. So there is return from the dividend income even when the share performance is poor.

Some hedge funds are 'market neutral' and should be proof against market downturns (they short stocks as well as long stocks). I don't know how you would access these as an American investor *and* even the professionals get it wrong. Some 'hedge' funds have proven to be anything but hedged*

• example. Amaranth was a 'multi asset' manager, offering risk protection by investing across stocks, commodities etc. In the event, it turned out that of their .5bn exposure, .5bn was a judgement call by a 29 year old trader, not based at corporate HQ in NY, but in Calgary, betting on rising natural gas prices. They lost over bn of investors money, and have since closed down. San Diego public employees pension fund, amongst others, lost 10s of millions of dollars on this.