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Overview
Equity Long-Short Funds are specialised investment strategies that can take both long and short positions in equities and equity-related instruments.
Unlike a conventional equity mutual fund that primarily seeks to benefit when its holdings rise, a long-short strategy can also use derivatives to take positions designed to benefit from falling prices or relative differences between securities.
In India, such strategies may be offered within the Specialized Investment Fund, or SIF, framework rather than as a conventional retail mutual fund category. Investors should therefore check the exact regulatory structure and scheme documents before investing.
Explained
An Equity Long-Short Fund is a strategy that combines long equity exposure with permitted short exposure, generally through derivatives.
A long position benefits when the price of the security rises.
A short position is designed to benefit when the price of the relevant security or exposure falls.
For example, a portfolio manager may believe Company A is attractively valued while Company B in the same industry is relatively expensive. The strategy could take a long position in Company A and a permitted short exposure to Company B through derivatives.
The actual implementation depends on the investment strategy, regulatory limits, and scheme documents.
Explained
The investment manager identifies both positive and negative investment opportunities.
The strategy buys securities or takes long exposure where the manager expects prices to rise or believes the assets are attractively valued.
The strategy can use permitted derivatives to establish short exposure where the manager expects relative or absolute underperformance.
Long and short positions are combined to create the desired net market exposure.
Suppose a strategy has substantial long equity positions but also uses short derivatives. Its net equity-market exposure may be lower than its gross exposure.
This makes gross exposure, net exposure, derivatives usage, and risk limits important when evaluating the strategy.
Suitability
Equity Long-Short strategies may suit experienced investors who:
These products should not be treated as automatically safer than long-only equity funds.
Advantages
Traditional long-only equity funds primarily invest in securities expected to appreciate. Long-short strategies can potentially use both positive and negative investment views.
Managers can adjust long and short positions based on valuations, company fundamentals, sector views, and market conditions.
Short positions may reduce some directional equity exposure. However, hedging is not guaranteed to protect the portfolio from losses.
Managers may attempt to profit from differences between companies, sectors, or securities rather than depending only on the overall market moving higher.
Before you invest
Long-short portfolios are more complex than conventional long-only equity funds. Investors should understand how the strategy creates returns before investing.
A short position can generate losses when the underlying security rises instead of falls. The behaviour of derivative-based short exposure can also differ depending on the instrument used.
Derivatives can introduce:
Do not evaluate a long-short strategy only by looking at its long equity holdings. Check both gross and net market exposure.
The strategy can depend heavily on the manager's ability to identify both outperformers and underperformers. Incorrect views on either side of the portfolio can hurt returns.
If the strategy is offered as a Specialized Investment Fund, investors should review the applicable SIF rules, Risk Band, minimum investment requirements, liquidity terms, and strategy-specific disclosures.
Taxation
Taxation should not be assumed from the phrase Equity Long-Short.
The applicable tax treatment depends on the legal structure of the investment product, its underlying portfolio, and prevailing Indian tax rules.
If the product is structured under the SIF framework, investors should verify its specific tax classification rather than automatically applying conventional equity mutual fund taxation.
Derivative exposure can also make simple category-level assumptions inappropriate.
Investors should check the scheme's current tax disclosures or consult a qualified tax professional before investing or redeeming.
Step by step
Good to know
It is a specialised investment strategy that can combine long equity positions with permitted short exposure, generally using derivatives.
A long position generally benefits when the price of the underlying security rises.
A short position is designed to benefit when the relevant security or exposure declines, although losses occur when the position moves in the opposite direction.
Not necessarily. Short positions may reduce certain market exposures, but derivatives, leverage, manager decisions, and strategy complexity introduce additional risks.
Investors should check the specific product. In India, specialised long-short strategies may be offered under the SIF framework rather than as conventional mutual fund categories.
Yes. A manager's long positions can decline while securities represented by short positions rise, causing losses on both sides of the strategy.
Review the product structure, gross and net exposure, derivatives, liquidity, Risk Band, fees, minimum investment requirements, and tax treatment.
Recap
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FUND
D
Diviniti Equity Long Short Fund Direct Reinvestment Inc Dist cum Cap WdrlEquity Equity Long-Short Fund₹916.29
0.56%N.A.
N.A.
N.A.
I
iSIF Equity Long-Short Fund Direct GrowthEquity Equity Long-Short Fund₹10.81
0.55%N.A.
N.A.
N.A.
S
Sapphire Equity Long-Short SIF Direct GrowthEquity Equity Long-Short Fund₹994.17
0.44%N.A.
N.A.
N.A.
A
Arthaya Equity Long Short Fund Direct GrowthEquity Equity Long-Short Fund₹9.87
0.3%N.A.
N.A.
N.A.
S
Summit Equity Long-Short Fund Direct GrowthEquity Equity Long-Short Fund₹10.44
0.1%N.A.
N.A.
N.A.
A
Arudha Equity Long-Short Fund Direct GrowthEquity Equity Long-Short Fund₹10.42
0.23%N.A.
N.A.
N.A.
Q
qsif Equity Long-Short Fund Direct Reinvestment Inc Dist cum Cap WdrlEquity Equity Long-Short Fund₹11.05
0.26%N.A.
N.A.
N.A.
W
WSIF Equity Long-Short Fund Direct GrowthEquity Equity Long-Short Fund₹10.41
0.14%N.A.
N.A.
N.A.
A
Apex Equity Long-Short Fund Direct GrowthEquity Equity Long-Short Fund₹9.96
0.1%N.A.
N.A.
N.A.
T
Titanium Equity Long-Short Fund Direct GrowthEquity Equity Long-Short Fund₹10.42
0.27%N.A.
N.A.
N.A.
D
Diviniti Equity Long Short Fund Direct GrowthEquity Equity Long-Short Fund₹916.29
0.56%N.A.
N.A.
N.A.
D
DynaSIF Equity Long - Short Fund Direct Payout Inc Dist cum Cap WdrlEquity Equity Long-Short Fund₹10.49
0.31%N.A.
N.A.
N.A.
S
Sapphire Equity Long-Short SIF Direct Reinvestment Inc Dist cum Cap WdrlEquity Equity Long-Short Fund₹994.17
0.44%N.A.
N.A.
N.A.
D
Diviniti Equity Long Short Fund Direct Payout Inc Dist cum Cap WdrlEquity Equity Long-Short Fund₹916.29
0.56%N.A.
N.A.
N.A.
S
Summit Equity Long-Short Fund Direct Reinvestment Inc Dist cum Cap WdrlEquity Equity Long-Short Fund₹10.45
0.1%N.A.
N.A.
N.A.
S
Summit Equity Long-Short Fund Direct Payout Inc Dist cum Cap WdrlEquity Equity Long-Short Fund₹10.45
0.1%N.A.
N.A.
N.A.
Q
qsif Equity Long-Short Fund Direct GrowthEquity Equity Long-Short Fund₹11.05
0.26%N.A.
N.A.
N.A.
Q
qsif Equity Long-Short Fund Direct Payout Inc Dist cum Cap WdrlEquity Equity Long-Short Fund₹11.05
0.26%N.A.
N.A.
N.A.
T
Titanium Equity Long-Short Fund Direct Reinvestment Inc Dist cum Cap WdrlEquity Equity Long-Short Fund₹9.83
0.27%N.A.
N.A.
N.A.
D
DynaSIF Equity Long - Short Fund Direct GrowthEquity Equity Long-Short Fund₹10.49
0.31%N.A.
N.A.
N.A.
Showing 1–20 of 21
