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Why Long/Short Funds Have Performed So Poorly?

TedTed
in Fund Discussions
FYI: Long/short funds are one of those strategies that is wonderful in theory but very difficult to pull off successfully in practice. These funds go long the stocks they think are going to rise and go short the stocks they think are going to fall. So they should be able to make money in a wide variety of market environments because of their ability to alter their exposure to the market along with their stock-picking prowess.

The long/short pitch really began to gain steam following the excruciatingly long bear market from 2000-2002. The S&P 500 was down three straight years. These funds typically only have 40-60% long exposure to the stock market, so they are technically hedged against market losses (assuming their stock picks don’t blow-up).
Regards,
Ted
http://awealthofcommonsense.com/why-have-longshort-funds-performed-so-poorly/

M* Long/Short Fund Returns:
http://news.morningstar.com/fund-category-returns/longshort-equity/$FOCA$LO.aspx

Comments

  • finder
    edited December 2015
    So what do you think about BURFX, QMNIX, QLEIX? Are they exceptions confirming the rule?
  • Chinfist
    finder said:

    So what do you think about BURFX, QMNIX, QLEIX? Are they exceptions confirming the rule?

    Just an example of it is not a good idea to paint all funds in a given category with a broad bush.

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