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Long-short funds: Check if shorting aims to cut risk or boost returns
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At least 10 asset management companies (AMCs) are preparing to launch long-short equity funds for high-net-worth individuals. These will operate under the Securities and Exchange Board of India's (Sebi's) new Specialised Investment Fund (SIF) framework, effective April 1, 2025, which mandates a minimum investment of ₹10 lakh. Sebi has introduced seven categories of long-short funds: three equity-oriented, two debt-oriented, and two hybrid.
How these funds work
Long-short funds aim to generate returns in both rising and falling markets by taking long positions when prices are expected to rise and short positions—via futures or options—when prices are expected to fall. 'This
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SIPs support portfolio growth over time, while InvITs generate cash flows that help smoothen returns. In volatile markets, steady income from InvITs can reduce the urge to panic-sell equities, encouraging long-term InvITs can serve a similar role as debt funds or dividend-paying stocks, but with direct exposure to infrastructure—an area India will continue investing in for investment is risk-free, and InvITs are no exception. Key risks include: Asset Performance Risk: Cash flows depend on asset performance and usage (e.g., toll roads, power lines). Reduced usage or inefficiencies can affect returns in the short term. Cash flows depend on asset performance and usage (e.g., toll roads, power lines). Reduced usage or inefficiencies can affect returns in the short term. Liquidity Risk: Though listed, InvITs may have lower trading volumes compared to equities, limiting liquidity. Though listed, InvITs may have lower trading volumes compared to equities, limiting liquidity. 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