130/30 Funds: The Prospect In Emerging Markets

130/30 funds integrate both long and short positions in a single portfolio, thus bridge the gap between traditional mutual funds and hedge funds. They are more reckoned as long-only plus rather than hedge fund minus due to the beta one market exposure and enhanced alpha generating capability. This paper gathers and assesses previous researches on the pros and cons of 130/30 investing. It also compares this strategy to other investment vehicles, highlights implementation challenges and measures historical performances. Ultimately the paper aims to delve into the prospect of 130/30 funds in emerging markets, with Chinese market selected as a delegate to simplify. The conclusion is that 130/30 funds will prosper in the near future, if not immediate, in the relaxed investment environment of emerging markets.