Video: Long-Short Funds Not All Created Equal

Long/short equity funds are designed to dampen volatility and mitigate downside risk. Between August 17 and 24, the S&P 500 fell a whopping 9.43% – so how did long/short equity funds perform? In this video, Morningstar’s Director of Manager Research Josh Charlson takes a look at the performance of the category, as well as some individual funds.

Mr. Charlson says long/short equity funds “performed within expectations” in the aggregate. Morningstar’s long/short equity category fell just 4.83% for the 10 day period from Aug. 17 – 24, outperforming the broad equity market by 460 basis points. But he cautions that there is a lot of dispersion among long/short funds: The Schooner A Fund (SCNAX), for example, returned +4.16% during the selloff, while the Wasatch Long/Short Fund (FMLSX) lost 7.06%.

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