Long and Short of It

Date: Tuesday, October 2, 2007
Author: Lyneka Little, Wall Street Journal

Long/short mutual funds, which employ investing techniques used by hedge funds, are supposed to fare better than the overall market in a downturn.

So a lot of small investors who last year piled into this category have been disappointed recently: The market gave the funds a workout and many didn't hold up well.

Almost half of the 54 long/short mutual funds tracked by Morningstar Inc. performed worse than the Standard & Poor's 500-stock index during the turbulence of July and August. The average one barely beat the benchmark, falling 1.54%, compared with the index's 1.65% decline, including reinvested dividends.

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