How to Benchmark Alternatives

Benchmarking alternatives isn't easy, but it's critical in making sure clients and advisors are clear on the investments' role in the portfolio. Here's how to benchmark private equity, non-traditional bonds and long-short funds.

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Comments (1)
A long-short portfolio that is 60% long and 40% short is actually 80% in cash. Here's how it works. You give me $1. I use it as collateral to short 40 cents worth of stock. The proceeds from that short sale are used to buy 40 cents worth of other stock, plus I use another 20 cents of that dollar you gave me, so I have 60 cents in the long stocks, and I'm left with 80 cents in cash.
Posted by Ron S | Monday, June 23 2014 at 2:57PM ET
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