Short-selling: Equity investors seek alpha through 130/30

In their quest to find excess return, institutional investors are increasingly turning to an investment technique that involves taking short positions in equity without straying too far from traditional long-only mandates, say the banks and fund managers that provide access to the strategy.

Variously known as 130/30, active extension or short extension, the strategy relies on relaxing long-only constraints to allow managers to take a specified proportion of short positions, thereby giving them the potential to create return from negative as well as positive views.