Investing experience may allow investors to make smart decisions and forecast, to some degree, the market. However, no amount of investing experience can foretell where the market will be at any given moment in time. There are too many variables and factors that come into play not to mention politics for any investor to be able to successfully manage a portfolio over the long run without some losses from time to time. However, overall market loss should not mean an automatic loss for your portfolio. The right portfolio to guard against losses is a long short fund.
A relatively new type of investment is the long short fund and despite being new it has some really good characteristics. There is no sure bet when it comes to investing, however, when a long short fund manager takes advantage of various investment approaches and includes them within one portfolio, risk is reduced and exposure is lowered.
In a long short fund there are two types of stocks, long and short. The goal is to include stocks that are anticipated to really outperform other stocks and investments while selling stock short the ones anticipated to decline in value.
When the market is on an upswing there is really no concern about return on investment because money is being made quite readily. However, when the market begins to fall investors with a long short fund portfolio won't be nearly as concerned as other investors for one simple reason; selling stock short gives the investor the ability to make money in a declining market.
If you want security from the volatility of the market and are concerned about maintaining your investment for years to come all the while hedging risk you may want to consider adding a long short fund to your portfolio.
However, if the market is in a downtrend then selling stocks short should provide a decent return and potentially cover any losses that might result from stocks that were purchased.
Author Resource:-
Long-Short mutual funds are offered by Bull Path Capital Management, a New York based registered equity asset management firm specializing in long-short strategies.
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