RT Journal Article SR Electronic T1 Unlocking the Cage JF The Journal of Wealth Management FD Institutional Investor Journals SP 66 OP 71 DO 10.3905/jwm.2006.628691 VO 9 IS 1 A1 Renato Staub YR 2006 UL https://pm-research.com/content/9/1/66.abstract AB Although investors have been searching for higher alpha strategies, not everybody has an appetite for hedge funds, as transparency in this arena is limited and fees tend to be high. As an alternative to investing in a hedge fund and an index fund to ensure both a and b exposure, we consider a levered-equity fund. However, in order to deploy the alpha potential, we must relax the long-only constraint. Based on a simulation—derived from the theory underlying the Fundamental Law of Active Management—we show that even a moderate softening of the short constraint provides a sizeable increase in portfolio efficiency.TOPICS: Real assets/alternative investments/private equity, mutual funds/passive investing/indexing, simulations, performance measurement