130/30 Fund
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A 130/30 fund, otherwise known as a short-enabled mutual fund, is a hybrid product that brings together long-only and long/short investment techniques, allowing managers to take action on both positive and negative opinions on stocks. A typical fund combines 100 percent long exposure to a list of stocks with 30 percent of short selling along with an added 30 percent of long exposure coming from investing the proceeds of shorting.
The theory behind this investment vehicle is that fund managers can maximize returns by benefiting from the ability to take long and short action rather than long only.
While the majority of 130/30 funds are currently equity products, mostly based on US large-cap benchmarks, some providers are launching funds in other asset classes such as fixed income.
