Long/short funds materially outperformed the Australian equity market in the 12 months to 30 April 2016, according to Zenith Investment Partners.
Zenith Investment Partners has released its Australian Shares - Long/Short sector report, which found the average return on long/short funds during the year-long review period was 4.6 per cent, whereas the S&P/ASX 300 returned -4.7 per cent.
Zenith senior investment analyst Justin Tay said: “Most managers within the Australian long/short space demonstrated an ability to preserve capital in what was a challenging and volatile period for the Australian equity market.”
Mr Tay added that the rated funds “also impressed from a risk-adjusted basis”, with lower volatility than the broader market.
Zenith found that within the long/short sector, managers using an 'active extension' strategy (short selling to improve returns exclusively through stock selection) delivered an average return of 5.5 per cent.
The report described the performance of active extension managers as “surprising” given the decline in Australia’s equity market during the time of the review.
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