Long/Short Equity

A long/short equity fund is a type of long/short fund that specialises in equity, as the name suggests. It seeks to go long undervalued equities and short overvalued ones. It is not necessarily the case that the longs and shorts must cancel out to leave no outright market exposure, although this is certainly possible, and would be known as Equity Market Neutral. More common would be a strategy such as a 130/30 where there is 130% long exposure and 30% short exposure. In general it tends to be more rewarding to find undervalued than overvalued shares, hence the long bias.