Long-short funds: Check if shorting aims to cut risk or boost returns
Published by Business Standard
Abhishek Kumar's role: Quoted
Abhishek Kumar cautioned that investors who prefer simple strategies should stay away from these funds. He suggested keeping them a small, non-core part of the equity portfolio, holding for three to five years, and waiting for a track record to build.
What Abhishek Kumar said
Who should stay away from long-short funds?
Because of their complex nature, I suggest that investors who prefer simple strategies stay away from long-short funds. These funds take both long and short positions, and if you are more comfortable with plain, easy-to-understand products, this is not the place for your money.
How much of my equity portfolio can go into long-short funds?
I suggest allocating 10–20% of the equity portfolio, depending on your risk appetite. These funds can partly replace traditional equity exposure, but I would not treat them as core holdings; they belong at the edge of the portfolio rather than at its centre.
How long should I stay invested in a long-short fund?
In my view a holding period of three to five years makes sense for long-short funds. That stretch gives you enough time to judge how the fund manager performs across different market cycles, and to account for the higher fees and the volatility that come with these funds.
Should I have invested in long-short funds as soon as they launched?
When these funds were being launched in 2025, I suggested giving them 12–18 months to build a track record. Even though established fund houses were launching them, the products had no performance history in India at that point, so there was little to judge them on at the start.
In our words, from what he said in the piece. General information, not personal advice.
More of Abhishek's views on mutual funds
The article explains long-short equity funds launched under SEBI's specialised investment fund framework, which requires a minimum investment of ₹10 lakh. It describes how these funds take short positions through derivatives, the added risks when both long and short calls go wrong, and who they may suit.
Publisher source
Long-short funds: Check if shorting aims to cut risk or boost returns