Long/Short Fund

Long/short funds are collective investment schemes that have the ability to be simultaneously long (i.e. own) and short (i.e. sell using borrowed securities with a view of driving down the price to repurchase at a lower price). Long/short exposures can be achieved with cash or synthetically using derivatives. A long/short fund might, for example, be long undervalued securities and short overvalued securities. This investing style is by definition not reliant on constantly rising prices to generate returns but it is generally seen as riskier and more volatile than long-only because both the long and short legs of the strategy could simultaneously underperform.