Net exposure is a hedge fund’s long asset positions minus its short asset positions (where the manager is positioned to benefit from prices falling). Net exposure is a measure of the extent to which a fund’s portfolio is exposed to market fluctuations. The fund manager will adjust

the net exposure in accordance with his or her investment outlook – bullish, bearish or neutral. A fund has a net long exposure if the percentage amount invested in long positions exceeds the percentage amount invested in short positions, and has a net short position if short positions exceed long positions. For example, a manager who has an 90% long exposure and 50% short exposure, has a net market exposure of 40%, and a gross exposure of 140%. Encor Wealth Management does not run funds with this type of mandate. Net exposure is also referred to as ‘net market exposure’.