130/30s: Turbocharging returns?


130/30 funds look like a sensible hybrid of the long-only and hedge fund worlds, but are these strategies a magic bullet, or an accident waiting to happen?

Not quite hedge funds, short extension strategies are gaining traction. But they're no magic bullet

By Carolyn Sargent

In mid-August, as market volatility hit a four-year high and quantitative hedge funds spiraled downward in lockstep, the $5 billion Indiana State Teachers' Retirement Fund found itself interviewing candidates to run its first allocation to a 130/30 fund. Such portfolios - which are not quite hedge funds but can go short and leverage up - are becoming a popular way for pension funds to try to turbocharge their returns.

The vast majority of