PT - JOURNAL ARTICLE AU - Renato Staub TI - Deploying Alpha DP - 2008 Jun 20 TA - Special Issues PG - 86--95 VI - 2008 IP - 1 4099 - https://pm-research.com/content/2008/1/86.short 4100 - https://pm-research.com/content/2008/1/86.full AB - In pursuit of higher alpha, a growing number of asset managers are choosing to loosen their portfolios' long-only constraint. They are supported by a growing body of academic research, suggesting that by relaxing the long-only constraint and introducing short selling of overpriced securities, asset managers can enhance the performance of their active equity strategies. Because of the maximum underweight determined by the underlying benchmark, conventional portfolios usually take long bets on stocks that research identifies as undervalued. Managers must avoid or underweight securities that are considered overvalued, with the size of the maximum underweights limited by the benchmark. As a result, portfolio efficiency is impaired.