“One must be careful as one never knows if the fund manager will make a mistake and fail to purchase a suitable amount of put options to offset risk, etc.,” adds Don Martin, an advisor with Mayflower Capital in Los Altos, Calif. “Or they could have puts that don’t properly track the risks of the long side of the portfolio.”

As Chang says, it’s not just about stock picking. It’s about knowing the risk and having an infrastructure at the fund that can support it.

Fear of long-short funds might be compounded by the fact that we’ve been in a bull market for five years, and many managers might have been tempted to simply go long like any other fund.

Martin got into the popular MainStay Marketfield Fund two years ago, but got out this past summer because he felt it was too long in its holdings and was too exposed to the market as a whole. He also distrusts the short track records of many long-short vehicles, as so many new ones have rushed to market in the past few years to take advantage of the low volatility trend. They aren’t hedging as seriously as they could, he says.

“These long-short funds tend to not be really 50/50 long or short. Many times really only a third of their assets are short. … and I felt there was too much evidence the market was going up in a bubble for stocks and I felt [Marketfield was] too long and their attitude was too bullish. It wasn’t really a long-short fund.”

Josh Charney, an alternatives investment analyst at Morningstar in Chicago, says the correlation between these funds and the market is currently relatively high, despite the great defensive play they were in 2008. “That correlation for the last couple of years, the average for all long-short funds, is 0.77.” However, he says, that’s reasonable for these strategies. “They are going to be more correlated than other alternative funds because they are so equity-based. … The market has been doing really well. There’s not a whole lot of need for downside protection at this juncture. So they are opening up their sails so to speak, kind of letting it ride.” At a beta of 0.5 or 0.6, he says (1.0 being in lockstep with the market) “they’ll move at about half the rate of the market.”

But going forward, you don’t want these funds performing in lockstep, and there is a market timing risk. The Marketfield fund, with almost $20 billion in assets, has ballooned from a shallow $2 billion since it was acquired by New York Life’s MainStay stable. Despite the huge inflow, the fund famously made bad bets early in 2014 that caused it to stumble (putting faith in names like Bank of Ireland and shorting consumer products companies like Coke, Kellogg and Nestle and emerging markets indexes that have rallied). But it’s still one of Verseput’s largest holdings, since he says the growth has been steady and the fund did indeed do what it was supposed to do in 2008: staunched the blood loss.