AMFI data for June 2026 showed Hybrid Long-Short schemes had ₹11,909.5 crore in assets across nine schemes and around 34,000 folios.
The category accounted for about 66.7% of total SIF assets and attracted ₹2,042.5 crore in net inflows during the month.
“The inflows so far have been on hybrid L/S funds, with a low-risk profile and positioned slightly above the Arbitrage or Income++ categories,” said Sriram BKR, Senior Investment Strategist at Geojit Financial Services, an Indian investment services and stockbroking company.
Bhautik Ambani, CEO of AlphaGrep Mutual Funds, an asset management company, said the category fills a gap for investors who want higher return potential than arbitrage or short-term debt but are not comfortable taking full equity risk.
Same label, different strategies
The popularity of Hybrid Long-Short does not mean all schemes carry the same risk.
Fund managers have considerable flexibility in how they combine equity, debt and derivatives. Some schemes may maintain very low net equity exposure and use short positions mainly for hedging. Others could take higher directional exposure or use the short book more actively to generate returns.
“Two funds under the same label can give investors very different experiences,” Ambani said, pointing to differences in net market exposure and derivative strategies.
Manish Gadhvi, CEO of FundsIndiaPartner, a digital platform built for mutual fund distributors, independent financial advisors (IFAs), and wealth partners, similarly said the category label does not reveal the exact portfolio an investor is getting. One scheme could behave closer to a growth-oriented hybrid fund, while another could resemble an arbitrage or absolute-return strategy.
Check net equity exposure first
Experts say net equity exposure can be a useful starting point when comparing these funds.
It indicates how much directional equity-market risk remains after accounting for long and short positions. A lower net exposure generally means less sensitivity to equity-market movements, while a higher exposure can make the fund more market-sensitive.
“Net equity exposure explains the directional position taken by the fund,” BKR said. It can help investors understand how a scheme may behave in rising and falling markets.
Agarwal, Co-Founder of Wealthy.in, an Indian online wealth management and investment distribution platform, said investors should also examine why the fund is using derivatives, who is managing the strategy and whether the fund’s actual portfolio matches its stated objective.
Don’t judge a new SIF by short-term returns
The limited track record of SIFs makes recent returns a weak standalone measure.
A strong three- or six-month return could reflect higher equity exposure, favourable market conditions or successful tactical positions. It does not necessarily establish that one fund has a better investment process.
For investors, the bigger question is what role the SIF is expected to play.
Agarwal said SIFs should generally complement, rather than replace, an investor’s core equity and debt allocation.
That makes portfolio fit important.
Before moving money from an FD, debt fund, arbitrage fund or existing hybrid fund, investors need to assess whether the SIF actually adds a different risk-return profile or simply overlaps with what they already own.
