Market Neutral

Market Neutral

In the context of hedge funds, a style of management that has long and short equity exposure with nearly exposure on average to fluctuations in the market. However, the on average qualification is important. The risk of the longs and the shorts could fluctuate through time leading to negative returns when the market falls sharply.

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Market Neutral

Describing an investment strategy in which one seeks to make the same return regardless of the performance of the broader market. There is no single way of executing a market neutral strategy, but it usually involves taking a combination of long positions and short positions. For example, one may take a long position on one index while also taking a short position on a similar index. Market neutral strategies may also involve some form of arbitrage.