Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Portfolio > ETFs

Marrying Long and Short

Your article was successfully shared with the contacts you provided.

The first two funds are linked to the Russell 3000, a barometer of the total U.S. stock market while CSM is linked to the Credit Suisse 130/30 Large-Cap Index, which was developed by MIT finance professor Andrew Lo and Credit Suisse Director of Quantitative Research Pankaj Patel.

The 130/30 concept employs a hedge fund-like strategy of marrying long holdings with short.

A 130/30 fund will typically invest 130 percent of its assets in long positions, which increase in value if stocks rise, while 30 percent of the fund is invested in short positions, which benefit if stock prices fall. The strategy is often sold under the premise it can provide protection in down markets and add broader diversification.

The 130/30 strategy is still new and an unproven strategy in the world of ETF performance. Since its inception during the spring of last year, the First Trust Enhanced 130/30 ETN (JFT) has lost around half its value.

For investors that don’t like the taxation and credit risk associated with ETNs, Fidelity Investments offers a 130/30 large cap mutual fund (FOTTX).

Ron DeLegge is the San Diego-based editor of


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.