130/30 Mutual Fund

Definition of '130/30 Mutual Fund'

A mutual fund that has long positions and short positions in its portfolio. Specifically, in a 130/30 mutual fund, the fund is long 100\% of its assets, and in addition it shorts 30\% of the value portfolio and uses the cash received in the short sale to invest long in more assets. So in total, the fund is 130\% in the long portfolio and 30\% in the short portfolio, hence 130/30.

Investopedia explains '130/30 Mutual Fund'

For example, if the fund is worth $100, it would invest the $100 in equity and then would short $30 worth of equity. In a short sale, the fund receives $30 cash and uses that $30 to invest long in more assets. So the fund is now long $130 and short $30. This is a popular strategy because it allows the manager to invest $160 for every $100 the investor puts into the fund.

Filed Under:

Related Video for '130/30 Mutual Fund'

comments powered by Disqus
Hot Definitions
  1. Market Capitalization

  2. Oil Reserves

  3. Joint Venture - JV

  4. Aggregate Risk

  5. Organic Growth

  6. Family Limited Partnership - FLP

Trading Center