Strategic Investment Group

What 130/30 Strategies are, and are not

June 2007

Within the past few years, equity managers have begun to offer a profusion of equity products called 130/30 strategies. They allow a manager to hold 130% of the portfolio’s net value in long positions, and 30% in short positions, thus producing a 100% net long exposure to equities.

These strategies have been lumped together under the name 130/30, but they are also referred to by a variety of other labels, such as alpha extension, limited shorting, and relaxed constraint portfolios. Also, the ratio may range anywhere from 120/20 to 140/40, both in name and in practice. Both U.S. and non-U.S. equity versions are available, in various equity styles.

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