On the topic of Hedge Funds, up until recently their market strategies were only for the rich and famous, but now some mutual funds are bringing hedge fund investment techniques to the general public. Specifically, the ability to be both long and short, or market neutral, in an account. Hence the new Morningstar database category, long - short.

If you own a stock expecting it to go up you are said to be long. If you have sold borrowed stock shares expecting to buy them back at a lower price in the future and then return the borrowed shares back to the owner you are said to be short the stock. For the most part the general public is not that familiar with short selling - many people don't realize you can profit from a stock dropping in price. The appeal to having both long and short positions in a fund at the same time is that depending on the exact ratio, the portfolio can be constructed to be market neutral, indifferent as to whether the major indices like the S&P 500 go up or down, or biased one way versus another depending on whether you are optimistic or pessimistic as to the general direction of the stock market.

Although there is still not a large number of these funds, currently ~ 97 long - short funds in the Morningstar database overseeing about $14 billion under management, it is still a big enough market that Morningstar felt it now warranted its own category. With only a small number of these public mutual funds available and a short performance history, the verdict is still out on whether the category will catch on. Only ~ 40% of these funds have a five year or longer operating history with the majority coming into existence in the last three years or less. However, some "big names" like Franklin Templeton, American Century, Calamos, Janus, and Rydex have entered the market, so expect more choices going forward. For the last three years for the quarter ended 9/30/06, the #1 Five Star Long - Short Fund earned a load-adjusted return of 19.23% per year while the bottom performer lost 2.39% per year. As the saying goes, "buyer beware". If you determine that this is a category you may want to invest in, do your homework first.

To read more Financial News be sure to visit and subscribe to the ManagingMoney.com Blog or to purchase books and videos on relevant Personal Finance issues visit the ManagingMoney.com Education Center.

Click Here to View the YouTube Video News Release