This year's best fund gained from bets against structurally flawed ETFs

New York

IN A YEAR that is shaping up to be the worst for hedge funds since at least 2011, one little-known long-short mutual fund manager is beating some of Wall Street's biggest names at their own game.

David Miller, 35, is doing so largely by using options to short leveraged exchange traded funds which are ETFs that offer two or three times the daily positive or negative return of an index and which have become increasingly popular among hedge funds and other traders as the broad US market has flatlined. Leveraged ETFs have seen inflows of US$9.5 billion this year, according to Lipper data.