In the first two months of this year almost every mandate Investor Weekly reported on went to a manager that specialises in long/short strategies.

The Australian Government Employees Superannuation Trust, QIC, NSW Super and BUSS(Q) have all either appointed long/short managers for the first time or increased their exposure to them.

As a strategy, long/short has always been popular with super funds, but what is driving this most recent charge towards hedging?

Super funds talk about "broadening their diversity" and "locking in alpha returns", but is this trend merely symptomatic of a deeper insecurity about the state of global and domestic markets?

Investors are becoming less and less confident about generating the same kind of returns they have achieved in the past. In fact, over the past four years managers did not even need to try. Even the most basic investor could have made double-digit returns - all you had to do was buy the right index.

Times are changing. Many in the market feel stocks are reaching their fair value and are looking beyond the long-only approach to equities in order to extract returns that are uncorrelated to traditional benchmarks.

"There is a general feeling that our market has run pretty hard and that investors will struggle to find value in 2007," Russell Investment Group investment strategist Andrew Pease said.

"The Australian market has compressed and there is not such a large spread between expensive stocks and cheap stocks. As such it has become more difficult for fund managers to find value."

QIC Implemented Equities Fund head Greg Liddell said he believed the trend towards long/short strategies had a simpler explanation - cost.

"It is a more efficient and accessible market these days," Liddell said.

"It is getting cheaper to short stocks, there is more liquidity in the market and increased competition in the prime brokerage business has meant costs are coming down."

Flexibility is also an advantage. Many of the long/short managers operate on a quantitative basis. This means that when they forecast a negative outlook on a stock or series of stocks they can sell short, rather than simply reduce the portfolio's exposure to them - as they would have done with a long-only strategy.

This enables them to generate better returns, but only if their forecasts are accurate.

The consensus remains, however, that there is life in the equities bull yet. "It is still a terrific environment for corporate earnings and valuations are not unreasonable," Liddell said.