| ort mutual funds should not be evaluated in the | | | | of a long short mutual fund will not be exceptional. |
| short run to determine whether they are | | | | Keep in mind that during a bull market traditional |
| successful or not. Instead, investors need to | | | | mutual funds are likely to outperform any long |
| understand what the long short mutual fund is and | | | | short mutual fund. This is not because the long |
| how it works in order to be able to gauge the | | | | short mutual fund is not successful but rather |
| success or failure of this particular type of | | | | because the short positions keep returns to a |
| investment. Basically, there are two main goals | | | | minimum. However, during a bear market |
| that long short mutual funds have for the | | | | investors should expect their long short mutual |
| investors. The first one is to try and provide | | | | fund to perform above and beyond their mutual |
| investors with a return on their investment that is | | | | fund counterparts. The reason why is because |
| better than the historical return on stocks. The | | | | when the majority of stock prices are falling the |
| next goal is to try and reduce the volatility of the | | | | short positions within the long short mutual fund |
| market by reducing the value fluctuations that | | | | typically perform very well. |
| many traditional stocks and mutual funds | | | | These examples help explain how the long short |
| experience. | | | | mutual fund works and why it can't be compared |
| The important thing for investors to keep in mind | | | | straight up with any hedge or mutual fund. It's not |
| is that with long short mutual funds there is no | | | | an apples to apples comparison and so the results |
| need to pay attention to the returns of the | | | | would be misleading. Investors aware of what a |
| overall market. Putting stock in these returns | | | | long short mutual fund is and the strategy |
| would be detrimental to the investor because | | | | involved will have no problem with less than stellar |
| they are not a true reflection of long short mutual | | | | returns during a bull market because when the |
| funds and their performance. Long short mutual | | | | bear market hits the long short mutual fund will |
| funds are for the long haul and it's important to | | | | certainly take off. |
| keep in mind that during a bull market the returns | | | | |