When 130/30 started heating up several years ago, some thought the trend was a marketing home run for the mutual fund industry. It was certainly a way to ride the hedge fund wave, so to speak. The pitch was in many ways perfect: The same risk with better returns potential. 

But Morningstar throws some water on the parade with some recent research. It compared short-extension funds with their long-only equivalents and found that only one significantly outperformed the long-only version. Why is this? It notes that there are some added costs to the short feature and the difficulty in general of shorting--which is not simply the opposite of going long. Added to that is the difficulty of keeping the funds beta in line with objectives. The industry may yet get it right, but it has its work cut out for it. 

For more:
- here's the Morningstar article