On the other hand, despite long-short funds' reputation as a hedging instrument, many managers will have their shorts be completely distinct from their longs.
A typical portfolio of industrial metals outperforms a portfolio of precious metals and that of all other metals as a hedging instrument against the adverse movement in sovereign bonds.
Investors need a hedging instrument that will capture the big spikes in volatility but doesn't see large gains and losses when market conditions are more normal.
