Adding short-selling to an otherwise long-only portfolio, such as a 130–30 strategy, is a popular approach for portfolio managers. The primary benefit is that such strategies reduce the inefficiencies of constraining a portfolio to long-only positions.

Harindra de Silva, CFA, will show how using short extensions increases expected information ratios by allowing a manager to act on negative views in ways other than by simply not buying a stock. He will also seek to answer the question: How much of a short extension should a manager add? De Silva will identify the roles various parameters play in determining the size of the short extension and will use historical and current equity benchmark data to illustrate the impact of changes in the model parameters over time and across markets.

This is an archived recording of a live webinar that took place on 28 May 2008 and is based on the following article:"Long–Short Extensions: How Much Is Enough?” by Harindra de Silva, CFA, with Roger Clarke, Steven Sapra, CFA, and Steven Thorley, CFA, Financial Analysts Journal, January/February 2008.

Please note that text may be difficult to read in this recording. The presentation slides are available for download in the video player.