A 130/30 mutual fund is a fund that has both 'long' and 'short' positions in its portfolio. A 130/30 fund starts by going long (buying) 100% of its assets, then it shorts 30% of the value (e.g. short selling stocks), then with the proceeds of the short sales it invests or goes long in more assets. Thus the fund becomes 130% long, and 30% short, giving a net exposure of 100% (or a gross exposure of 160%). Essentially this is a leveraged strategy, whereby the fund manager is able to generate $160 of exposure for every $100 the investor puts in the fund.
Synonyms: Leveraged fund, Gearing, Long/Short, Leverage
If you have any further questions or would like to add to the entry above, then please submit your thoughts below.