Market Neutral Funds
Long one stock, short another, so market moves largely cancel out. The return comes from the manager's skill in the pair, not from which way the market went.
By Yash Jhaveri, Founder & CEO, Beyond
Beyond · JSL Wealth Management · Vadodara · ARN XXXXX
Last reviewed September 2026 · Regulatory position as at September 2026
What it actually is
Absolute-return Category III AIF strategies, also available through GIFT inbound. They pair long and short positions to strip out market direction. The aim is steady positive returns whether the index rises or falls. Debt-like outcomes from an equity engine.
The job it does
- Debt-plus returns without duration or plain credit risk
- Positive-target returns in flat or falling markets
- A preservation sleeve that still puts capital to work
Why people use it
- Low correlation with both equity and debt markets
- Monthly-style liquidity — rare at this return level
- Drawdowns designed to stay shallow
What can go wrong
- Fund-level tax typically at the maximum marginal rate (scheme-specific) eats into gross returns
- Results depend entirely on manager skill
- Stress periods can break long-short relationships for a while
Does Market Neutral Funds belong in your architecture?
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