Mutual funds are experimenting with their strategies a bit, borrowing from the hedge fund world, and testing risky investment strategy “130/30,” according to the Wall Street Journal. The strategy is a way to place bets that stock prices will fall, in hope of profiting from those declines. Mutual funds typically shy away from betting on falling prices, although a handful have tried the technique.As hedge funds and other loosely regulated investments attract piles of investors’ money, more mutual funds are switching their game.
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However, just as it has been shown to boost returns, it also adds significant risks, since shorting stocks can be an uncertain strategy that can go very wrong if the market makes unexpected moves.
The strategy is a “blending of traditional money management and hedge-fund management,” said Ric Thomas, head of U.S. enhanced equities at