Market Neutral Funds
Long one stock, short another, so overall market moves largely cancel out. Returns come from the manager’s skill in the pair, not the direction of the market.
What it actually is
Absolute-return Category III AIF strategies (also available via GIFT inbound) that pair long and short positions to remove market direction, aiming for steady positive returns whether the index rises or falls. Debt-plus 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 at the maximum marginal rate 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?
Seven questions narrow thirteen structures to a shortlist.
Content on this site is for education only and is not investment advice or an offer to sell any product. Past performance does not guarantee future results. Please consult your Chartered Accountant and read all scheme documents before investing.