TY - JOUR T1 - The Efficiency Gains of Long-Short Credit Strategies JF - The Journal of Fixed Income SP - 5 LP - 15 DO - 10.3905/jfi.2005.605420 VL - 15 IS - 3 AU - Frederick E. Dopfel AU - Sunder R. Ramkumar Y1 - 2005/12/31 UR - https://pm-research.com/content/15/3/5.abstract N2 - The potential efficiency gain associated with long-short active strategies compared with long-only active strategies has been known for some time as it applies to equity portfolios. Owing to recent developments in the fixed-income market, long-short strategies can now be used for credit risk selection. This article reviews the framework and assumptions for assessing the potential efficiency gains for long-short investment-grade credit and high-yield credit strategies compared with the efficiency gains for long-short equity. Despite differences in benchmarks and in security-specific risk and portfolio risk characteristics, the expected efficiency gains for long-short credit strategies are demonstrated to be similar in magnitude to those previously found for long-short equity strategies. This has important implications for how investors should structure fixed-income portfolios to exploit these efficiencies. ER -