New Delhi, March 26 -- Alternative investment funds (AIFs) that deploy long-short strategies have approached the market regulator seeking an increase in their leverage ability to gain an advantage over newly launched specialized investment funds (SIFs) that are said to be eroding their collective asset base.

SIFs, a category of mutual funds that operate long-short strategies, were launched in April 2025 and enjoy a tax advantage over their rival category III AIFs. This has led to the closure of some AIF long-short funds.

A long-short strategy is typically adopted by hedge funds to protect against risk by taking long and short positions in stocks.

While tweaking the tax structure is not in their hands, a group representing AIFs wants th...