Earlier today the Managed Funds Association released a video detailing how and why the hedge fund industry uses short selling as an investment strategy. As part of a continuing series of educational videos on the global hedge fund industry, the new video outlines how short selling works and how hedge funds use the strategy to benefit their investors.
Some hedge fund managers use a strategy called the “long-short” approach. A “long” position in the financial world indicates that a fund is investing in a company because they think the financial position of the company is going to get improve over a specific window of time. A “short” position indicates that a fund manager believes that the price of the company’s stock is too high and it is likely to drop in value over a specific period of time. “It is merely one efficient strategy that a hedge fund manager will use in managing risk. It’s also an important element in market function to keep prices fair and the market efficient,” said Richard H. Baker, President and CEO of Managed Funds Association.
You can learn more about short selling by viewing MFA’s latest educational video. While there, be sure to MFA’s YouTube Channel to view this and the previous videos in the series. Check back to the YouTube Channel often over the coming weeks, as MFA will continue to roll out more educational videos in the series.