Arbitrage Mutual Funds
Arbitrage Mutual Funds aim to generate returns by exploiting price differences between the cash and derivatives markets while maintaining relatively low risk.
Low
Risk Level
Arbitrage
Strategy
Equity
Taxation
6+ Months
Ideal Horizon
What Are Arbitrage Mutual Funds?
Arbitrage Mutual Funds seek to benefit from price differences between the cash market and futures market.
Fund managers simultaneously buy securities in one market and sell them in another market to lock in price differences and generate returns.
These funds are generally considered lower-risk compared to traditional equity mutual funds and are often used for short- to medium-term parking of surplus funds.
Why Investors Choose Arbitrage Funds
Key Features of Arbitrage Funds
Market Arbitrage Strategy
Seeks to capture pricing differences between cash and futures markets.
Lower Volatility
Generally experiences lower volatility compared to traditional equity mutual funds.
Risk Management
Simultaneous buy and sell transactions help reduce directional market risk.
Short-Term Investing
Often used for parking surplus funds over short to medium durations.
Liquidity
Provides relatively easy access to funds while aiming for stable returns.
Equity Taxation
Enjoys equity mutual fund taxation despite its low-risk investment approach.
Benefits of Investing in Arbitrage Funds
Lower Risk Exposure
Arbitrage Funds are generally considered lower-risk because they rely on price differences rather than market direction.
Equity Tax Benefits
These funds are taxed like equity mutual funds, which can be beneficial for certain investors.
Suitable for Short-Term Goals
Can be considered for short- to medium-term financial goals and temporary fund parking.
Professional Management
Experienced fund managers identify and execute arbitrage opportunities across markets.
Risks to Consider
Mutual fund investments are subject to market risks. Please read all scheme-related documents carefully before investing.
Limited Arbitrage Opportunities
Returns depend on the availability of arbitrage opportunities in the market.
Interest Rate Risk
Debt instruments held within the portfolio may be affected by interest rate changes.
Lower Return Potential
Arbitrage Funds may generate lower returns compared to equity-oriented growth funds.
Who Should Invest in Arbitrage Funds?
Conservative Investors
Short-Term Investors
Low Risk Appetite
Alternative to Debt
6+ Month Horizon
Popular Arbitrage Mutual Funds
Past performance is not indicative of future returns. Consult your Kuberzo advisor before investing.
Kotak Equity Arbitrage Fund
ICICI Prudential Equity Arbitrage Fund
Nippon India Arbitrage Fund
Aditya Birla Sun Life Arbitrage Fund
SBI Arbitrage Opportunities Fund
Frequently Asked Questions
What are Arbitrage Mutual Funds?+
Arbitrage Funds seek to generate returns from price differences between cash and derivatives markets.
Are Arbitrage Funds risky?+
They are generally considered lower-risk than traditional equity mutual funds, but they are not risk-free.
Who should invest in Arbitrage Funds?+
Investors seeking relatively low-risk investment options with equity taxation benefits.
What is the ideal investment horizon?+
An investment horizon of six months or longer is generally preferred.
Ready to Start Investing in Arbitrage Funds?
Arbitrage Mutual Funds offer a relatively low-risk way to participate in market opportunities while benefiting from equity-oriented taxation.