Alternative investment: US hedge funds look to short side

The number of funds with a dedicated real estate strategy is only slowly growing. Dominated by long-biased funds, the market will expand only if managers prove that shorting can be profitable. Helen Avery reports.

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Hedge fund research firm HFR estimates that of the 8,000 or so hedge funds around the world, the number of dedicated real estate funds may be barely more than 70. Of this small number, industry participants suggest almost all are long/short real estate hedge funds. And of those long/short funds, the majority plays the long side. “Many of the property hedge funds in the US are more long exposed, in some cases nearly as much as mutual funds,” says Wilson Magee, president of Colony Investment Management LLC and a global real estate securities portfolio manager.

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