What Is the 130-30 Strategy?

The 130-30 strategy, often known as a long/short equity strategy, is a long/short equity strategy employed by institutional investors. A 130-30 classification means that 130 percent of beginning money is dedicated to long positions, with the remaining 30 percent coming from shorting equities.
The approach is used in a capital efficiency fund. It employs financial leverage by shorting underperforming companies and investing the proceeds in shares that are projected to generate a high rate of return. When selecting stocks for this approach, investors frequently follow an index such as the S&P 500.