Update On 130/30 Funds
On 130/30 Funds, there no real magic:
Essentially you are leveraging up your bet on a manager’s ability to add value though taking on only a bit more market risk than with a regular fund. The tricky part is that the manager has to be quite good at both longs and shorts to make it work. And from the looks of it, not many managers have been able to add value in this strategy this year. Of the 18 leveraged net long (our phrase that encompasses 130/30 and 120/20 funds) funds only three are ahead of their category benchmark for the year to date.
Having leverage and 100% net long exposure is a tough place to be in a bear market.
http://news.morningstar.com/articlenet/article.aspx?id=261584