A market neutral fund aims to profit from the relative performance of two very different portfolios of shares of equal value. Firstly, in much the same way as most investors, the manager buys.. Login to read full article.
A market neutral fund aims to profit from the relative performance of two very different portfolios of shares of equal value. Firstly, in much the same way as most investors, the manager buys a portfolio of shares they like, with the expectation this portfolio will deliver better than average returns over time. At the same time, they sell (or short) a portfolio of shares they don’t like. The manager expects this second portfolio to deliver much worse results than the market over time. The combination of these portfolios provides a market neutral structure. In simple terms, by holding equal value of long and short positions, exposure to the underlying sharemarket movements is significantly reduced.
