TY - JOUR T1 - Unlocking the Cage JF - The Journal of Wealth Management SP - 66 LP - 71 DO - 10.3905/jwm.2006.628691 VL - 9 IS - 1 AU - Renato Staub Y1 - 2006/04/30 UR - https://pm-research.com/content/9/1/66.abstract N2 - 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 ER -