Some perspective on 130/30 funds, a year into the "(r)evolution"

Steve Deutsch, CFA, CAIA, Director of Collective Investment Trusts/Separate Accounts, Morningstar, Inc.

Despite all the excitement about short-extension strategies, 130/30, 120/20 and other constrained ratio investment products are not that monolithic or revolutionary (Morningstar refers to them simply as "leveraged net long").  Contrary to popular assumption, most are not purely quantitative.  Nor are they the sole domain of mutual fund companies and retail investors.  And given their short histories, many remain unproven.  As a result, it is far too early to determine if these vehicles will reach $2 trillion (or even $1 trillion, for that matter) in the next five years.

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