November 13, 2019
Long-short equity strategies have been used for a long time, but the current volatility and uncertainty plaguing the market is markedly influencing this investment approach. Writing for Firstlinks, Tribeca’s Jun Bei Liu discusses short selling – how it works and the multiple roles it plays.
Shorting is a controversial topic in Australia and has often been unfairly blamed for creating excessive volatility in markets. However, short selling doesn’t change the underlying fundamentals of a business. Shorting creates opportunities for investors with differing views, aids in price discovery and provides greater market depth.
Traditional long-only fund managers are, by definition, skewed towards identifying opportunities to buy, whereas those managers that adopt a long-short approach can take a position in a range of investment opportunities across a much wider spectrum of investment options through both buying and short-selling.
The most obvious benefit of long-short investing, therefore, is that it offers investors the ability to benefit from both rising and falling prices, whatever the market conditions. A long-short equity strategy seeks to profit from share price appreciation above the index in its long positions as well as from price declines below the index in its short positions.
To read the article, click here.