Market Neutral


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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.

Market-Neutral Investing

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 but not identical index. Market neutral investing may also involve some form of arbitrage.
References in periodicals archive ?
1) value market neutral long/short mimicking portfolio ("value MN"), which is 100% long in the 30% highest BV/MV stocks, 100% short in the 30% lowest BV/MV stocks and 100% long in a risk-free asset,
In addition, absolute return strategies are utilized, such as market neutral, currency trading and diversified arbitrage.
However, the Equity Hedge sub-strategies of Short Bias, Technology/Healthcare and Equity Market Neutral posted gains of +0.7, +0.7 and +0.4 per cent, respectively.
We forecast that after a two-day decline in the Russian Eurobond market neutral dynamics will prevail on Wednesday in Russian Eurobonds.
Pairs trades, a market neutral strategy which matches a long position with a short position in two stocks of the same sector, creates a hedge against the overall market as the investor bets solely on the gap between the performance of the two stocks.
It is also interesting to note that market neutral funds tend to have a more stabilizing effect on the financial markets as a whole, even though they can be quite vicious to prey on the already weak entities i.e.
Equity Market Neutral strategies gained +0.88%, while Short Bias funds posted a loss of -6.3%.
The Fund invests in liquid pan-European stocks implementing a proprietary hybrid long/short and market neutral strategy that aims to produce attractive returns with low volatility and low beta correlation to equity markets.
Short bias and managed futures -- the best performing strategies last year -- lagged, along with asset-based lending and market neutral equity.
This allows the funds to take, for example, a market neutral or market directional stance, which means they have the opportunity to make money in rising or falling markets.
One way of reconciling this conundrum--of achieving returns above inflation but without risking principal--is to go for a market neutral fund with a capital guarantee.
Although organizations such as the American Association of University Professors (AAUP) are trying to ensure that all faculty salaries are more market neutral, the affect of outside market factors on faculty salaries continues to influence the number of new faculty who are available to teach within a particular discipline, and the degree to which faculty salaries relate to salaries of similar career tracks outside of academe.