Most Australian Equity funds simply buy shares, but this one can also bet against them. The VanEck Australian Long Short Complex ETF (ASX:ALFA) runs a long-short strategy that aims to outperform the local sharemarket by owning favoured stocks and shorting those it expects to lag, prompting questions about whether its more flexible, active approach can keep adding value.

What the ETF Does

This is an actively managed, complex exchange-traded product that runs a long-short Australian equity strategy, aiming to outperform the S&P/ASX 200 Accumulation index over the medium to long term. As well as buying shares it expects to rise, the fund can take short positions in shares it expects to fall, seeking to profit from both winners and losers and to add value beyond a simple long-only approach. This long-short structure makes it more complex and potentially more volatile than a standard index fund, and its returns depend heavily on the manager's skill in selecting both longs and shorts. Being classified as a complex product reflects the use of Short Selling and related techniques. It trades on the ASX like an ordinary share, offering access to an active long-short strategy in a single listed vehicle.

Why It Is on the Radar

Long-short strategies attract interest when investors want active management that can potentially profit in both rising and falling markets, rather than simply tracking an index. With parts of the Australian market looking stretched and dispersion between winners and losers widening, a fund able to short as well as buy appeals to those seeking differentiated returns. This fund's steady performance has kept it in focus for investors weighing more flexible, active approaches to local equities.

What Could Drive It Next

The manager's skill in selecting both long and short positions is the dominant driver, so stock-level dispersion and the accuracy of those calls matter most. A market with clear winners and losers suits a long-short approach, while broad, indiscriminate rallies can be harder for short positions. The direction of the Australian sharemarket and sector rotation both feed into returns. Manager judgement and disciplined risk management remain central throughout, since the short book requires careful control.

Risks to Watch

Short selling adds risk: if shorted stocks rise, the fund can lose money on those positions, and losses on shorts are theoretically open-ended. Active management brings manager risk, and the strategy can underperform a simple index. As a complex product, it is more sophisticated than a standard fund and demands understanding. The relatively short history limits data across cycles. Ordinary Australian sharemarket risk also applies to the long book in any downturn.

Closing

This ETF offers access to an active long-short Australian equity strategy able to profit from both favoured and out-of-favour stocks, a more flexible approach than a long-only index fund. It suits investors who understand long-short investing and accept the manager and complexity risks involved.