Long/Short Equity – Market Neutral | Mackenzie Investments

Long/Short Equity – Market Neutral

Long/Short Equity – Market Neutral

This video demonstrates a simple illustrative example of a Long/Short Equity Market Neutral alternative strategy.Watch to learn more.

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A long-short manager starts with $100 and believes that 2 stocks will have performance that differs significantly from the market. Stock A is expected to increase in price, and Stock B is expected to decrease in price. So the manager borrows $100 worth of Stock B and sells it in the market. The manager receives $100 on the short selling trade and now has $200 to invest. The manager invests the $100 in Stock A and the other $100 in T-bills. Now the fund has $100 long equity, $100 short equity, and $100 T-bills. The strategy is called Market Neutral (100/100) which has $200 exposure to the stock trade ideas, and a total net long exposure of $0 (long minus short), while it still keeps its alpha potential from the long and short positions.

These investment allocation examples discussed in this video are for reference purposes only and do not reflect the overall investment strategy of Mackenzie Multi-Strategy Absolute Return Fund.

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