The Long and Short of Making Money with Funds

Physician's Money Digest, August 2006, Volume 13, Issue 8

Wall Street Journal

Physician-investors looking to preservecapital may want to take a look at the split-personalityworld of long-short funds.According to the ,long-short funds are funds that make theirmoney by betting that some stocks willincrease in price while others will drop. The"long" half refers to investments in securities,while "short" refers to short selling,where a borrowed stock is sold in hopes ofbuying it later at a lower price to return tothe lender. This schizophrenic approach toinvesting is actually more conservativethan it appears. Long-short funds couldhelp keep your portfolio diversified, andmay even rise in value during expansivemarket declines. Currently, long-short fundsare only offered by a few firms, while morewidely known fund companies, such asAmerican Century Investments and JanusCapital Group, have announced plans tointroduce their own long-short funds soon.However, long-short funds have their shortcomings.Fees for the funds are higher thanregular stock funds, and the strategies theyuse are quite complicated.