130/30 long-short equity strategies

September 2019

This paper aims to familiarize institutional investors with 130/30 (longshort “extension”) equity strategies.

It addresses how these strategies were developed, why these strategies (and their variants) may be of interest to institutional investors, and how to deploy them within their portfolios. The paper also reviews the risk and return characteristics of 130/30 strategies, compares them to long-only strategies, addresses several implementation issues, and provides a snapshot of the current 130/30 marketplace. Finally, the paper provides clear quantitative and qualitative examples so that institutional investors may better understand the underlying mechanics of these strategies