Rethinking Equity Long/Short Allocations For Retail Investors

How to solve poor performance, excessive fees and blow-up risk

BEACHHEAD CAPITAL MANAGEMENT, LLC

The model for allocating to equity long/short funds is broken. The mentality of most allocators is to chase the “hot dot” – that is, invest with a fund that performed well recently and hope the hot streak continues. This approach is based on the discredited assumption that allocators can easily identify which funds will perform well going forward. In addition, the risk inherent in individual equity long/short funds is widely misunderstood – the equivalent of conflating...

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