Long/Short Fund


DEFINITION of 'Long/Short Fund'

A type of mutual fund that mimics some of the trading strategies typically employed by a hedge fund. Unlike most mutual funds, long/short funds use leverage, derivatives and short positions in an attempt to maximize total returns, regardless of market conditions. The amount of leverage used and the number of derivatives and short positions that long/short funds may contain are limited by law. These funds invest primarily in stocks.

BREAKING DOWN 'Long/Short Fund'

Long/short funds are the mutual fund industry's attempt to bring some of the advantages of a hedge fund to the common investor. Most long/short funds feature higher liquidity than hedge funds, no lock-in period and lower fees. However, they still have higher fees and less liquidity than most mutual funds. Furthermore, unlike most mutual funds, long/short funds usually require a minimum investment of more than $1,000, although some do not. Long/short funds aren't allowed to use as many derivative and short positions nor as much leverage as hedge funds, but they do provide some diversification to the average investor in down markets.

  1. Liquidity

  2. Derivative

  3. Hedge Fund

  4. Hedge-Like Mutual Fund

    A mutual fund that adopts an alternative investment strategy, ...
  5. Mutual Fund

  6. Leverage

Related Articles
  1. Mutual Funds & ETFs

    Taking A Look Behind Hedge Funds

  2. Options & Futures

    A Brief History Of The Hedge Fund

  3. Options & Futures

    Hedge Funds: Higher Returns Or Just High Fees?

  4. Options & Futures

    Hedge Funds Hunt For Upside, Regardless Of The Market

  5. Financial Advisors

    5 Things All Financial Advisors Should Know About ETFs

  6. Investing

    Time to Bring Active Back into a Portfolio?

  7. Mutual Funds & ETFs

    The Democratization of the Hedge Fund Industry

  8. Retirement

    Two Heads Are Better Than One With Your Finances

  9. Professionals

    A Day in the Life of a Hedge Fund Manager

  10. Mutual Funds & ETFs

    American Funds' Top Funds for Retirement

  1. What's the difference between a mutual fund and a hedge fund?

    These two types of investment products have their similarities and differences. First, the similarities: Both mutual funds ... Read Full Answer >>
  2. Can hedge funds trade penny stocks?

  3. How liquid are Vanguard mutual funds?

  4. Are hedge funds regulated by FINRA?

  5. Which mutual funds made money in 2008?

  6. Does OptionsHouse have mutual funds?


You May Also Like

Hot Definitions
  1. Cyber Monday

  2. Bar Chart

  3. Take A Bath

  4. Black Friday

  5. Turkey

  6. Barefoot Pilgrim

Trading Center