Long/Short Fund

A type of mutual fund that attempts to deploy trading strategies and methods used by some hedge funds via short positions and derivatives. There are usually less leveraged than hedge funds with more restrictions on their positions and maximum leverage. They may provide more diversification and some protection to investors in a down market.
However, it is important to keep in mind, that unless the fund is properly hedged, it may not weather adverse market conditions as expected. It is also possible for a long/short fund to lose money on both long and short positions thereby amplifying losses. Finally, if a long/short fund is perfectly hedged, it may restrict gains an investor could’ve made unhedged.

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