Exchange traded funds continue to increase in number and popularity, growing to one of the most commonly traded securities on the stock exchange as both institutional and the average retail investor gain greater access to broad or specialized market exposure. Yet many individuals are unfamiliar with ETFs’ inner workings. In this ongoing series, we hope to address your questions and help shed light on the investment vehicle. [What is an ETF? — Part 19: 529 Savings Plans]

With all the major investment strategies and styles covered, ETF providers have expanded their product lines to include alternative investment strategies, such as the long/short strategy previously limited to large hedge funds. [Market-Neutral ETF Targets Sector Rotation Strategy]

The typical long/short fund uses derivatives, leverage and short positions in an attempt to maximize returns for any market condition. [Leveraged/Inverse ETFs]

For instance, the 130/30 strategy shorts poor performers – as the ratio implies, it will short up to 30% of the portfolio – and goes long stocks that are expected to perform. The ProShares Credit Suisse 130/30 ETF (NYSEArca: CSM) would go long 130% the attractive large-cap S&P 500 companies and goes short 30% the weaker companies, providing a 100% overall market exposure.

FactorShares and QuantShares are two notable providers that exclusively cater toward long/short ETF investor. Both companies provide funds that offer to help investors maximize profits on the spread return of going long one segment of the market and shorting another segment. [Market Neutral ETF Outperforming in 2012]

For past stories in this series, visit our “What is an ETF?” category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.