Long/short – what could go wrong? Hedged positions, protection etc etc etc. And yet there are headlines like this one:

Here’s Why Long / Short Hedge Funds Are Getting Hammered

One of the problematic aspects of such an approach is that “long/short” is a hard category to define – and there is no consensus around the term. Which leaves plenty of room for whatever headline one wishes to shock and amaze with.

The IAM took a stab at the definition in cooperation with the LSE's Financial markets Group a few years ago. They produced the following classification table of hedge fund strategies:



A cursory examination will show that Long/Short is a broad church. And complicating matters are those of its disciples who regularly trek over to the neighbouring tabernacle of Relative Value to worship.

Thus probably it is worth defining precisely what class of strategy is being analyzed before daubing all L/S with the same brush.

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