The fund’s managers can short stocks though it is highly unlikely that they will do so. The fund can also transact in derivatives though the only derivatives transactions expected to be part of any of the funds’ ongoing strategy are foreign currency futures contracts for the sole purpose of hedging currency exposure when foreign stocks are held. Even in this case, it is unlikely that most foreign currency exposure will be hedged. In the case of Litman Gregory Masters Funds International Fund, some of the managers do not hedge their currencies while others will hedge, depending on the circumstances.
On rare occasions managers may write options as part of a tax management strategy. But other than currency hedging, derivatives are highly unlikely to be part of the funds’ holdings.