Mumbai: Who wouldn’t want a challenging, respectable, high-paying job as a money manager in the fast-growing mutual fund industry? That’s what mutual fund chief executives and hiring managers assumed until they started looking for equity short-selling specialists-professionals who profit by betting on declines in stocks or indices. As mutual funds gear up to roll out niche investment strategies, many are discovering a glaring void: a shortage of seasoned short-sellers in India.The sudden demand for short-sellers among mutual funds stems from their new business initiative, known as specialised investment funds (SIFs), which allow these asset managers to launch targeted strategies like the long-short. That approach bets on both rising and falling stocks. While mutual funds specialise in ‘long-only’ strategies, classic stock picking, they are not equipped to handle the other leg-short selling.With Sebi nudging mutual funds to launch such products traditionally run by Alternative Investment Funds (AIFs), fund houses are racing to hire specialists adept at managing both legs of a long-short strategy.So far, a handful of mutual funds such as Nippon, Axis, Mirae and Edelweiss have launched SIF businesses. Nippon hired Andrew Holland, while Axis roped in Nandik Mallik. Both were part of Avendus’ long-short fund, which folded up. Several other fund houses, which are in the process of launching the business, are on the lookout for experienced money managers, while some are considering automated systems to select bearish bets. So, where are the skilled short-sellers? A decade-long, near one-way bull market left little room for bearish bets and even less incentive to build short-side expertise.”For short selling talent to emerge, the macro must be conducive,” said R Venkat Subramanian, head of USK Capital, the family office of Uday Kotak. “Both fiscal and monetary policies are generally in favour of markets moving up.”The decline in short-selling isn’t unique to India. In the US, legendary short-seller Jim Chanos wound down his hedge fund in 2023. Earlier, billionaire investor Bill Ackman stepped back from activist shorting, while Hindenburg Research, known for its high-impact short calls, shut shop in 2025. Short-sellers are often the most hated in the stock market because they make money from the misfortunes of companies and other investors. Companies, in turn, fear them and often look to shake them off their backs at any cost.”The dice is loaded against short sellers as company managements have larger resources to spin the narrative in their favour,” said USK’s Subramanian. “Moreover, stressed companies, which are perfect short-selling candidates, have been able to raise enough capital to ease the strain, resulting in limited opportunities.”In India, the last of the meaningful short-selling exercises was seen in 2008-09 in the aftermath of the global financial crisis. While many made some big money amid the market tumble, they came away with a lasting lesson: shorting in India is a tricky business and may not be worth the effort. A big concern-lack of confidentiality.”Short-selling in India is not easy because our markets are porous and positions don’t remain a secret for long,” said Nilesh Shah, MD, Kotak Mutual Fund. “You will get short-squeezed in no time if markets are aware of your short positions. The SLB (Securities Lending and Borrowing) mechanism is not deep, which compounds it.”The fading art of short-selling has suddenly got a shot in the arm thanks to the capital markets regulator’s push for mutual funds to launch long-short funds. In India, Category III AIFs and sophisticated proprietary desks are the ones that trade such strategies, making these firms the hunting ground to hire talent. But it hasn’t been a cakewalk.”When we talk to skilled and experienced long-short specialists for hiring, they are mainly concerned about two aspects: remuneration and the insider trading restrictions once you are part of the mutual fund industry,” said Kotak’s Shah.Mutual funds are offering ₹1.25-2 crore a year for long-short fund managers. But AIFs typically pay more, thanks to performance-based profit-sharing. Profit-sharing demands have emerged as deal breakers in hiring talks, according to mutual fund CEOs.Beyond pay, many are unnerved by the stricter mutual fund regulations for employees.”They are worried that joining an SIF would result in a lot of restrictions,” said Shah. “For instance, there are very few restrictions on recording or mobile phone usage during dealing hours in an AIF, which is not the case in mutual funds. At the end of the day, there is a mindset issue also.”Long-short specialists at AIFs are in no rush to test unfamiliar waters. That may change, though, if SIF regulations ease and these products find wider acceptance, especially given their tax advantage over AIFs.”It’s still a new animal,” said Rishi Kohli, managing partner & CIO, hedge fund strategies, InCred Capital. “They are waiting for things to settle down before they take a plunge. While SIFs are better than AIFs in terms of taxation, there are restrictions on how much short positions can be taken in a long-short portfolio. Once that is eased from the current 25%, fund managers might find it much more comfortable to perform.”Category III AIFs, which mainly trade derivatives, pay tax at the highest slab-around 39%-which eats into investor returns after fees. In contrast, SIFs will be taxed under capital gains rules applicable to equities.Despite early complexities, the timing might be apt to launch long-short funds. “The environment is quite conducive right now because of the valuation excesses in the market and rising global interest rates,” said Subramanian.
Mumbai: Who wouldn’t want a challenging, respectable, high-paying job as a money manager in the fast-growing mutual fund industry? That’s what mutual fund chief executives and hiring managers assumed until they started looking for equity short-selling specialists-professionals who profit by betting on declines in stocks or indices. As mutual funds gear up to roll out niche investment strategies, many are discovering a glaring void: a shortage of seasoned short-sellers in India.The sudden demand for short-sellers among mutual funds stems from their new business initiative, known as specialised investment funds (SIFs), which allow these asset managers to launch targeted strategies like the long-short. That approach bets on both rising and falling stocks. While mutual funds specialise in ‘long-only’ strategies, classic stock picking, they are not equipped to handle the other leg-short selling.With Sebi nudging mutual funds to launch such products traditionally run by Alternative Investment Funds (AIFs), fund houses are racing to hire specialists adept at managing both legs of a long-short strategy.So far, a handful of mutual funds such as Nippon, Axis, Mirae and Edelweiss have launched SIF businesses. Nippon hired Andrew Holland, while Axis roped in Nandik Mallik. Both were part of Avendus’ long-short fund, which folded up. Several other fund houses, which are in the process of launching the business, are on the lookout for experienced money managers, while some are considering automated systems to select bearish bets. So, where are the skilled short-sellers? A decade-long, near one-way bull market left little room for bearish bets and even less incentive to build short-side expertise.”For short selling talent to emerge, the macro must be conducive,” said R Venkat Subramanian, head of USK Capital, the family office of Uday Kotak. “Both fiscal and monetary policies are generally in favour of markets moving up.”The decline in short-selling isn’t unique to India. In the US, legendary short-seller Jim Chanos wound down his hedge fund in 2023. Earlier, billionaire investor Bill Ackman stepped back from activist shorting, while Hindenburg Research, known for its high-impact short calls, shut shop in 2025. Short-sellers are often the most hated in the stock market because they make money from the misfortunes of companies and other investors. Companies, in turn, fear them and often look to shake them off their backs at any cost.”The dice is loaded against short sellers as company managements have larger resources to spin the narrative in their favour,” said USK’s Subramanian. “Moreover, stressed companies, which are perfect short-selling candidates, have been able to raise enough capital to ease the strain, resulting in limited opportunities.”In India, the last of the meaningful short-selling exercises was seen in 2008-09 in the aftermath of the global financial crisis. While many made some big money amid the market tumble, they came away with a lasting lesson: shorting in India is a tricky business and may not be worth the effort. A big concern-lack of confidentiality.”Short-selling in India is not easy because our markets are porous and positions don’t remain a secret for long,” said Nilesh Shah, MD, Kotak Mutual Fund. “You will get short-squeezed in no time if markets are aware of your short positions. The SLB (Securities Lending and Borrowing) mechanism is not deep, which compounds it.”The fading art of short-selling has suddenly got a shot in the arm thanks to the capital markets regulator’s push for mutual funds to launch long-short funds. In India, Category III AIFs and sophisticated proprietary desks are the ones that trade such strategies, making these firms the hunting ground to hire talent. But it hasn’t been a cakewalk.”When we talk to skilled and experienced long-short specialists for hiring, they are mainly concerned about two aspects: remuneration and the insider trading restrictions once you are part of the mutual fund industry,” said Kotak’s Shah.Mutual funds are offering ₹1.25-2 crore a year for long-short fund managers. But AIFs typically pay more, thanks to performance-based profit-sharing. Profit-sharing demands have emerged as deal breakers in hiring talks, according to mutual fund CEOs.Beyond pay, many are unnerved by the stricter mutual fund regulations for employees.”They are worried that joining an SIF would result in a lot of restrictions,” said Shah. “For instance, there are very few restrictions on recording or mobile phone usage during dealing hours in an AIF, which is not the case in mutual funds. At the end of the day, there is a mindset issue also.”Long-short specialists at AIFs are in no rush to test unfamiliar waters. That may change, though, if SIF regulations ease and these products find wider acceptance, especially given their tax advantage over AIFs.”It’s still a new animal,” said Rishi Kohli, managing partner & CIO, hedge fund strategies, InCred Capital. “They are waiting for things to settle down before they take a plunge. While SIFs are better than AIFs in terms of taxation, there are restrictions on how much short positions can be taken in a long-short portfolio. Once that is eased from the current 25%, fund managers might find it much more comfortable to perform.”Category III AIFs, which mainly trade derivatives, pay tax at the highest slab-around 39%-which eats into investor returns after fees. In contrast, SIFs will be taxed under capital gains rules applicable to equities.Despite early complexities, the timing might be apt to launch long-short funds. “The environment is quite conducive right now because of the valuation excesses in the market and rising global interest rates,” said Subramanian. Economic Times
