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Dedicated Short Bias

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Definition of 'Dedicated Short Bias'

A hedge fund strategy that maintains a net short exposure to the market through a combination of short and long positions. A dedicated short bias investment strategy attempts to capture profits when the market declines, by holding investments that are overall biased to the short side.

Investopedia Says

Investopedia explains 'Dedicated Short Bias'

A dedicated short bias is a directional trading strategy that entails taking a net short position in the market, meaning that a larger proportion of the portfolio is dedicated to short positions, rather than to long positions. Being net short is the opposite of being net long; hedge funds that maintain a net long position are dedicated long bias funds. Dedicated short bias funds include instruments such as ProShares UltraShort 20+ Year Treasury, PowerShares DB US Dollar Index Bearish, and Short Dow30 ProShares.

Prior to the long-term bull market for U.S. equities that took place in the 1980s and 1990s, many hedge funds used a dedicated short strategy, rather than a dedicated short bias strategy. The dedicated short strategy was one that exclusively took short positions. The dedicated short funds were virtually destroyed during the bull market; the dedicated short bias fund emerged and took a more balanced approach.

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