Go long on high-conviction stocks while selectively shorting weak names or indices — aiming for smoother, risk-adjusted returns regardless of broader market direction.
This isn't just buying stocks. It's a sophisticated, hedged approach combining long positions in strong stocks with short positions in weak ones.
An Equity Long–Short strategy simultaneously holds long positions (stocks the fund manager expects will rise) and short positions (stocks or indices expected to fall or underperform). The goal is to generate alpha — returns that don't depend on whether the market goes up or down.
Returns come from three sources: (1) the long book outperforming its cost of capital, (2) the short book declining in value, and (3) the spread between the two. In a flat market, a well-run L/S fund can still generate positive returns if the longs outperform the shorts.
Fund manager screens 500+ stocks using quantitative and fundamental filters to build a watchlist.
High-conviction stocks with strong earnings, institutional flows, and sector momentum are picked for the long book.
Weak fundamentals, deteriorating sectors, or overvalued names are shorted via single-stock or index derivatives.
Position sizing, stop losses, and net exposure limits are enforced daily to manage drawdown risk.
The portfolio is dynamically adjusted based on earnings updates, macro developments, and valuation changes.
Short positions act as a hedge during market corrections, potentially reducing drawdowns vs. a long-only portfolio.
Returns are driven by stock selection skill, not just market direction. Even flat markets can produce positive returns.
L/S strategies tend to have lower correlation with traditional equity indices, improving overall portfolio diversification.
Net exposure can be adjusted — more aggressive in bull markets, more hedged in volatile or bear environments.
Both longs and shorts are backed by deep fundamental research, not speculative trades. Institutional-grade process.
Operates within SEBI's SIF framework with defined exposure limits, daily NAV, and full regulatory compliance.
Equity Long–Short is not for everyone. Here's a clear picture of who this strategy suits — and who should avoid it.
Understand the risk-reward characteristics before committing capital to this strategy.
Regular equity MFs can only go long — they buy stocks and hope they rise. An Equity L/S SIF can also short stocks or indices, allowing it to potentially profit or limit losses even when markets decline. This gives the fund manager more tools to generate alpha.
Most advisors recommend 10–20% of your total equity allocation as a satellite strategy. The exact percentage depends on your risk appetite, total portfolio size, and investment goals. We'll help you determine this during the suitability assessment.
No. SIFs are structured like mutual funds with NAV-based investing. Your maximum loss is limited to your invested amount. The SEBI framework has built-in exposure limits to prevent excessive leverage.
SIF taxation follows the mutual fund taxation framework. LTCG over ₹1.25 lakh is taxed at 12.5% for equity-oriented SIFs (held over 1 year). STCG is taxed at 20%. Please consult your CA for personalised tax advice.
In a strong bull market, the short book can create a drag on total returns compared to a long-only fund. However, well-managed L/S funds short specific weak stocks (not the entire market), so the long book can still outperform the shorts significantly. The trade-off is better protection during downturns.
Compare different SIF mandates to find the one that fits your portfolio best.
Mid/small cap focus with defined short exposure
Dynamic sector bets with long & short views
Bond core with tactical duration shorts
Dynamic multi-asset with macro signals
Balanced equity-debt with drawdown hedges
Book a free, no-obligation call with our SIF advisor. We'll assess your suitability and show you exactly how this strategy can fit into your portfolio.
No obligation · SEBI-regulated products only · Suitability assessed first