There are two main reasons for this. First, the stock market fluctuates depending on its performance. If you believe the market may decline or underperform in the future, you can short or sell stocks only through derivatives, i.e., futures and options, so that you can buy back at a lower price and make a profit.

Mutual funds are also known as long-only funds. This means that mutual funds can use futures and options strategies only for hedging and portfolio rebalancing, not for shorting.

As of today, such long-short funds are already available under AIF Category III 3, in which an investor has to invest a minimum of ?1 crore, which is not practical for everyone. Therefore, investors who want to invest in long-short funds can start their investment journey in such funds through SIF with a minimum of ?10 lakh.

Second, many unauthorized WhatsApp and Telegram channels also lure investors with the promise of higher profits through futures and options. SEBI wants investors not to get trapped in such a situation and such funds should be managed only under the guidance of SEBI regulated fund managers.

Investments in Specialized Investment Fund involves relatively higher risk including potential loss of capital, liquidity risk and market volatility. Please read all investment strategy related documents carefully before making the investment decision.