What is a long-short mutual fund?

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Long-short mutual funds are market neutral, dividing their exposure equally between long and short positions in an attempt to earn a modest return that is not tied to the market’s swings. The strategy seeks capital growth and income.

Long-short strategies are best suited to investors who expect low returns from stocks in coming years, because these strategies do not rely solely on market returns. In this environment, the best funds might be those that seek to reduce stock market exposure without eliminating it.

The goal is to get most of the market’s returns when stocks go up, while paring the losses when stocks tumble. The problem with these funds is that neutral investors might prefer them, while any investor who

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