Most ASX investors know the big four banks, the major miners, and the popular tech stocks.
Far fewer know about L1 Long Short Fund Ltd (ASX: LSF), an ASX-listed investment fund that has quietly been one of the best performing funds in the country.
Over the past twelve months, LSF shares have risen approximately 50%, comfortably outpacing the ASX 200's gain over the same period.
Moreover, the fund just lifted its quarterly dividend, making it an increasingly interesting proposition for both growth and income investors.
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What is the L1 Long Short Fund?
L1 Long Short Fund is an ASX-listed investment fund managed by L1 Capital, a Melbourne-based investment management firm founded in 2007.
The fund employs a long-short equity strategy, taking long positions in stocks it believes are undervalued and short positions in stocks it believes are overvalued.
Consequently, the fund can generate returns in both rising and falling markets, giving it a meaningfully different risk profile from a traditional index fund or long-only managed fund.
The L1 Capital long-short strategy has returned 19.9% per annum since its inception in 2014, making it the top-performing long-short fund in Australia on that measure.
The performance story
The numbers behind LSF are quite impressive.
Over the past twelve months to April 2026, L1 Long Short Fund delivered a net return of 54.8%, compared to just 10.1% for the S&P/ASX 200 Accumulation Index, an outperformance of more than 44 percentage points.
Over five years, the portfolio has generated 18.1% per annum, compared to 9.9% for the benchmark.
The December quarter alone delivered a 14.1% net return, driven by strong long positions in Mineral Resources, Flight Centre, and mid-cap gold stocks, as surging lithium prices, resilient iron ore, and a continued gold price rally all contributed positively.
The dividend lift
Beyond the capital performance, LSF has transitioned to quarterly dividend payments in FY2026, with each quarterly dividend fully franked at 3.6 cents per share.
That implies an annualised dividend of approximately 14.4 cents per share if maintained, representing a substantial increase from prior years.
For an investment fund that also delivers strong capital growth, that income component adds an attractive dimension to the overall return proposition.
Where is L1 positioning for FY2027?
The fund's managers have been transparent about their macro-outlook and positioning.
They believe Australian equities are relatively fully valued at the index level, particularly in large caps, and are increasingly finding better risk-reward in offshore markets and low price-to-earnings value stocks.
In particular, L1 has expressed conviction in infrastructure, gold, US cyclicals, uranium, and what it describes as "quality value" opportunities globally.
This positioning reflects a rotation away from expensive growth names toward assets the managers believe offer superior medium-term return potential.
Foolish takeaway
The L1 Long Short Fund is not a household name, but the performance record speaks for itself.
For investors seeking an actively managed ASX fund, long-short equity strategy with a proven track record, a growing fully franked dividend, and a management team with genuine conviction in their positioning, LSF deserves serious attention.
