Glossary of Manager Styles
LONG / SHORT EQUITY
The traditional hedge fund approach, first developed in the 1950s, involves taking simultaneous long and short equity positions, in an attempt to globally neutralize overall market moves. For example, in a successful strategy, if markets decline, the gains on the short positions will globally offset the losses on long positions. The strategy's net gain will then depend solely on superior stock-picking: if the long picks outperform during market rises, and short picks underperform during market declines, the Fund will make positive returns regardless of overall market direction. With the advent of derivatives markets, Futures and options are now frequently used to replace the short-selling leg of the strategy.
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