Currently hedge funds are implementing a widely studied strategy called: 130/30. These two figures represent the capability of the manager to buy stocks to a maximum of 130% of the portfolio (it means leveraged instruments can be used) and to bet downwards (short) until 30% of the portfolio is reached.
The attractive point of this type of investment is its ability to seriously reduce the systematic risk or market risk, due to the fact it can short overvalued stocks. It is worth considering to what extent this technique could be useful in our own investments.
