Moneycontrol Dezerv Wealth Summit: Sandip Tandon on why long–short equity needs a mindset shift in India

Sandip Tandon of Quant Mutual Fund

Sandip Tandon, Founder of Quant Group says long–short equity is a new and evolving product for Indian markets, where the bigger challenge lies not in structure but in investor education and mindset. Shorting, he says, is still largely perceived as a hedging tool rather than a means of generating alpha.

Speaking at the Moneycontrol Dezerv Wealth Summit, Tandon said that while certain HNIs and family offices already use short positions to generate alpha, this understanding has not yet filtered through to the wider investor base. “The moment we talk about shorting, it is linked with hedging. Nobody thinks about shorting for alpha creation,” he says.

He points out that the significance of the product lies in the regulatory framework itself. For the first time, SEBI has enabled a structure that allows investors to focus on superior risk-adjusted returns and effective beta management. Tandon notes that Indian markets have traditionally been driven by a fixation on absolute and relative returns, with very limited discussion around risk-adjusted outcomes. “Very limited people talk about risk-adjusted return,” he adds.

Tandon also highlights the behavioural challenge associated with shorting. Investors are conditioned to accept losses on long positions, often adopting a buy-on-dips approach. However, the same tolerance does not exist on the short side. “When you short, you don’t have the mindset to lose money,” he explains. Shorting is rarely viewed as insurance or risk protection, but as a pure alpha strategy where losses are seen as unacceptable.

Accepting that losses can occur on short positions, while managing overall portfolio risk, is a learning curve the industry is now experiencing for the first time, Tandon says.

In a global environment marked by geopolitical uncertainty and market volatility, he believes the relevance of long–short equity strategies will only increase. The easy phase of the bull market, according to him, is over. “In a difficult phase of the bull market, these types of products give far better risk-adjusted opportunities,” Tandon says, adding that patience is key for investors adopting such strategies.