Rising equity markets over the summer months have reawakened a question for investors in long/short equity funds: to what extent do they expect these managers to participate in the rally?

The average equities hedge fund gained 1.19% in August and is up 3.49% this year, according to data provider Hedge Fund Research. During the first eight months of the year, the S&P 500 index gained 13.5%, while the MSCI was up 8.2%. Hedge funds are set to underperform equity markets for the fourth year in a row.