These seem to be a new thing, made possibly by a change in the law (at least in Europe). Previously mutuals were limited to investing only in cash, bonds or stock. Now, they're allowed to short and trade commodities directly.
Anyone got any ideas about major problems, warnings about this type of 'long-short' fund?
The most obvious problem that I see is that these funds don't automatically grow if the stockmarket as a whole grows. But at the same time, if the stockmarket tanks, these funds tend to retain their value.
What about performance in a falling market? Mutual long-shorts weren't around in 2k1, but presumably plenty of hedgies were. However, they're a secretive bunch these HF managers, and it's difficult to find historical performance figures, especially for any funds that may have collapsed, or closed due to underperformance.
Anyone got any ideas about major problems, warnings about this type of 'long-short' fund?
The most obvious problem that I see is that these funds don't automatically grow if the stockmarket as a whole grows. But at the same time, if the stockmarket tanks, these funds tend to retain their value.
What about performance in a falling market? Mutual long-shorts weren't around in 2k1, but presumably plenty of hedgies were. However, they're a secretive bunch these HF managers, and it's difficult to find historical performance figures, especially for any funds that may have collapsed, or closed due to underperformance.
