Equity Ex-top 100 Long-short Mutual Funds

Would you wonder if you could participate in the growth story of mid-cap and small-cap companies as well as take benefits of stocks that may decline?

Equity Ex-Top 100 Long-Short Mutual Funds are designed to fulfil these purposes. This innovative approach combines investments in companies that are not part of the top 100 listed companies of India according to market capitalisation and stocks investment with short selling through derivatives. In this manner, a portfolio is created in a way that provides exposure to market upsides and downsides at the same time, which increases returns in general.

What are Equity Ex-Top 100 Long-Short Mutual Funds?

Equity Ex-Top 100 Long-Short Mutual Funds are special mutual funds designed for equity investments which mainly invest in those firms whose market capitalisations are not among the top 100 firms. The equity ex-top 100 long-short mutual funds follow the long-short investment strategy where investors can invest in the form of taking long positions on stocks that are expected to move upwards and short positions on some other stocks using derivatives.

How to Invest in Equity Ex-Top 100 Long-Short Mutual Funds?

You can invest in Equity Ex-Top 100 Long-Short mutual funds by following simple process:

Step 1: Choose investment mode. You can invest through:

• AMC websites
• Online investment platforms provided by stockbrokers
• Mutual fund distributors

Step 2: Choose suitable Equity Ex-Top 100 Long-Short Mutual Fund

Step 3: Choose between Systematic Investment Plan (SIP) and Lump sum based on your goal and make investment.

Step 4: Make payment through UPI, netbanking or other available methods.

Features of Equity Ex-Top 100 Long-Short Mutual Funds

• Focus on Mid-and Small-Cap Opportunities: The fund primarily invests in companies beyond the top 100 listed stocks, providing exposure to emerging businesses with higher growth potential.
• Long-Short Investment Strategy: The portfolio manager can buy promising stocks and take limited short positions through derivatives to potentially benefit from declining stock prices.
• Enhanced Diversification: By combining long and short exposures, the strategy seeks to diversify return sources beyond traditional equity investing.
• Potential Risk Management: Short positions may help cushion portfolio volatility during market corrections or periods of stock-specific weakness.
• Professional Fund Management: Experienced fund managers actively identify opportunities in both undervalued and overvalued securities.

Why to Invest in Ex-Top 100 Long-Short Mutual Funds?

• Higher Growth Potential: Mid and small-cap stocks tend to provide more growth potential than those already matured.
• Benefits of Market Inefficiencies: The stocks below the top 100 can be under-researched and under-followed by providing opportunities for fund managers to pick up undervalued shares.
• Protection Against Losses: Short selling can potentially offset losses if markets turn out unfavorably.
• Enhanced Diversification: The funds can diversify investment beyond typical equity funds.
• Experienced Implementation of Advanced Strategies: This will allow investors to employ advanced long-short strategy without having to manage derivatives and short sales directly.

Taxation Rules for Ex-Top 100 Long-Short Mutual Funds

The Ex-Top 100 Long-Short mutual funds depends on the equity exposure and prevailing tax regulations:

• Short-Term Capital Gains (STCG): If the mutual fund units are sold within 12 months from the date of purchase, the profits will be taxed at 20%, with applicable surcharge and cess.
• Long-Term Capital Gains (LTCG): Profits made from selling units after 12 months on gains beyond ₹1.25 lakh in a fiscal year will be taxed at 12.5%, whereas LTCG up to ₹1.25 lakh is tax-exempt.
• Dividend Income: The dividend received will be taxed as per the slab rate.