Falling short
130/30 funds have entered the limelight on both sides of the Atlantic over the past year. However, some suggest the format is not all it's cracked up to be, and that it involves additional risks that long-only investors and managers might find difficult to deal with. Mark Pengelly investigates
130/30 funds are seemingly the new darlings of the asset management industry, generating a tide of enthusiasm and investment inflows over the past 18 months. Perceived as an evolution on traditional long-only investment products, the funds are mostly long, yet incorporate a 30% short portfolio that is used to finance an additional 30% leveraged long exposure. They fit into a spectrum of what are perhaps more properly termed short extension strategies, with 120/20 and 140/40 products also on the
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