At the end of share market cycle, long-short funds have a role.

Some quotes from this article by Justin Braitling of Watermark Funds Management:

"The chart below reveals a sharemarket that is expensive on historic valuation measures."

"Another way to consider risk is to think about where we are in the business cycle. You can see in the chart below this cycle is shaping up as one of the longest on record. As shares become more expensive and the business cycle approaches its inevitable conclusion, investors should contemplate how they can avoid these mounting risks. While you may miss out on the final blow-off in shares, by avoiding the next inevitable drawdown you will be miles ahead in the long run. "

"In constructing a share portfolio, there are few ways of reducing this market risk other than to shift into cash. But there are other alternatives. At Watermark we employ hedging strategies that reduce or eliminate this risk while still allowing us an opportunity to generate alpha for our investors.
We do this by adding a short portfolio of shares that creates a natural hedge in the structure. Investors benefit to the extent the long portfolio of shares we like outperforms the short portfolio of shares we dislike, while benefiting from the hedge.In this strategy, shorts are used as a means of adding extra alpha while at the same time removing market risk which we believe is mounting. Low beta, zero beta or market-neutral strategies such as these should continue to deliver positive returns even if the cycle turns and shares start falling."