130/30 has apparently gone from the cat’s meow to doggone unpopular.

P&I reports this week that investors are “abandoning” 130/30 strategies.  However, the reality, as the article goes on point out, isn’t quite as dramatic.  According to the magazine’s widely followed semi-annual survey of short-extension managers, 130/30 AUM is down a little over 30% over the past 6 months.  With year over year AUM down 20%+ for the asset management sector overall, this may not actually qualify as “abandoning” – but “shying away” to be sure.  Reports the newspaper:

“In a risk-averse environment, 130/30 has lost its cool factor, with investors shying away from the strategy after getting clobbered in the market downturn.”

At an estimates US$50b managed by a handful of money managers (see P&I league table here), short extension funds were never more than a nascent sector.  Like all new industries, percentage increases and decreases can look pretty dramatic.

This point is apparently not lost on several 130/30 managers interviewed by P&I.  The head of UBS’s long/short business told the newspaper: More…