No alpha in hedge funds’ average short positions – research

A strategy betting against low conviction shorts beat a benchmark model by 6% in back tests

stock prices
Getty Images

The best way to make money from hedge funds’ short ideas may be to bet against them.

Piggybacking on the ‘best ideas’ of hedge fund managers is a popular strategy among exchange-traded funds that aim to replicate their returns. But when researchers tested a similar strategy using data on hedge funds’ favourite short ideas, they found it was more profitable to trade against the managers than with them.

“Our findings are consistent with investors not having an informational edge as far as shorts

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

To continue reading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: