Less than two years ago, investment managers were scrambling to launch their own 130/30 funds, but interest has cooled significantly after these funds largely failed to perform in the recession.

The 130/30 strategy, also known as active-extension strategies, uses 100% equity leveraging to increase risk, resulting in magnified gains and losses. The funds offer highly skilled managers an opportunity to outperform the market, but in the six months ending March 31, 130/30 funds collectively plunged 32.9% from $47.02 billion to $31.56 billion.

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