Shorting. What Is It Good For?

The following is a guest post from Eric Fernandez, CFA of Two Rivers Analytics. The S&P is at record highs yet again. Shorting has been difficult for the past several years as equities have continued their ascent.  More than a handful of well-regarded short-biased funds have closed their doors since 2014.  You could be forgiven for asking what shorting is good for. Don’t short-change shorting The top three reasons institutions invest in hedge funds, according to Prequin’s Global Hedge Fund Report, are: to seek uncorrelated returns (59%); to seek higher risk-adjusted returns (56%); and to reduce portfolio volatility (46%). Surprisingly, just seven…