Equity Hedge Strategy Advantages

Angelica Financial Partners is a hedge fund that employs an equity hedge strategy primarily focused on long/short equity positions. The fund manager, John, employs both fundamental analysis to identify undervalued companies for long positions and technical analysis to identify overvalued stocks for short positions. Recently, the firm has observed significant volatility in the market, leading to concerns about potential adverse effects on their portfolio.

As part of their due diligence, John is evaluating the implications of executing a short sale versus holding cash in a low-interest-rate environment. He is considering the risks associated with short positions, such as margin calls, and the impact of potential market rallies that could adversely affect his short positions.

What is the primary advantage of an equity hedge strategy that employs short positions in the context of market downturns?