Faint Praise For 130/30 Funds

Hedged (long/short) mutual funds are the money management industry’s answer to illiquid hedge fund strategies. The premise of long/short funds is that the managers can apply their security-selection skills to a broader opportunity set, which is to say they can go both long and short, instead of long only.

The broader opportunity set should make it easier to outperform long-only funds. Note that some long/short portfolios have overall positive exposures to the market.