Fund categories

Arbitrage Funds

Fund categoriesArrow
Fund Name
7.37%₹500₹735.66Invest
7.18%₹1,000₹24,255.89Invest
Tata Arbitrage Fund - Direct (G)
Tata Arbitrage Fund - Direct (G)

Arbitrage Fund | Hybrid

7.16%₹5,000₹20,106.78Invest
ITI Arbitrage Fund - Direct (G)
ITI Arbitrage Fund - Direct (G)

Arbitrage Fund | Hybrid

7.15%₹5,000₹47.01Invest
7.12%₹1,000₹27,150.96Invest
Kotak Arbitrage Fund - Direct (G)
Kotak Arbitrage Fund - Direct (G)

Arbitrage Fund | Hybrid

7.08%₹100₹72,279.21Invest
7.08%₹100₹16,687.08Invest
7.08%₹100₹331.15Invest
UTI-Arbitrage Fund - Direct (G)
UTI-Arbitrage Fund - Direct (G)

Arbitrage Fund | Hybrid

7.07%₹5,000₹10,105.83Invest
7.04%₹5,000₹39,858.59Invest
AXIS Arbitrage Fund - Direct (G)
AXIS Arbitrage Fund - Direct (G)

Arbitrage Fund | Hybrid

7.02%₹500₹7,873.09Invest
Bandhan Arbitrage - Direct (G)
Bandhan Arbitrage - Direct (G)

Arbitrage Fund | Hybrid

7.00%₹100₹8,747.55Invest
6.99%₹5,000₹32,195.64Invest
HDFC Arbitrage Fund - Direct (G)
HDFC Arbitrage Fund - Direct (G)

Arbitrage Fund | Hybrid

6.97%₹100₹23,009.16Invest
6.97%₹100₹23,009.16Invest
6.96%₹5,000₹3,422.28Invest
6.94%₹5,000₹15,894.51Invest
HSBC Arbitrage Fund - Direct (G)
HSBC Arbitrage Fund - Direct (G)

Arbitrage Fund | Hybrid

6.92%₹5,000₹2,402.56Invest
6.92%₹5,000₹1,279.43Invest
DSP Arbitrage Fund - Direct (G)
DSP Arbitrage Fund - Direct (G)

Arbitrage Fund | Hybrid

6.90%₹100₹6,447.92Invest
LIC MF Arbitrage Fund - Direct (G)
LIC MF Arbitrage Fund - Direct (G)

Arbitrage Fund | Hybrid

6.80%₹5,000₹288.55Invest
6.78%₹5,000₹101.83Invest
6.70%₹500₹1,256.94Invest
Union Arbitrage Fund - Direct (G)
Union Arbitrage Fund - Direct (G)

Arbitrage Fund | Hybrid

6.68%₹1,000₹295.82Invest
6.59%₹1,000₹1,930.24Invest
JM Arbitrage Fund - Direct (G)
JM Arbitrage Fund - Direct (G)

Arbitrage Fund | Hybrid

6.53%₹1,000₹390.54Invest
6.37%₹5,000₹43.16Invest
NJ Arbitrage Fund - Direct (G)
NJ Arbitrage Fund - Direct (G)

Arbitrage Fund | Hybrid

6.31%₹5,000₹261.98Invest
6.13%₹1,000₹84.67Invest
6.99%₹5,000₹535.44Invest
6.62%₹500₹1,664.56Invest
Quant Arbitrage Fund - Direct (G)
Quant Arbitrage Fund - Direct (G)

Arbitrage Fund | Hybrid

4.26%₹5,000₹298.20Invest
1.30%₹1,000₹91.27Invest
Samco Arbitrage Fund - Direct (G)
Samco Arbitrage Fund - Direct (G)

Arbitrage Fund | Hybrid

5.20%₹5,000₹22.66Invest
0.00%₹5,000₹-Invest
0.60%₹1,000₹241.99Invest
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1Y returns

7.37%

Min. Invest

₹500

AUM

₹735.66 Cr

1Y returns

7.18%

Min. Invest

₹1,000

AUM

₹24,255.89 Cr

1Y returns

7.16%

Min. Invest

₹5,000

AUM

₹20,106.78 Cr

1Y returns

7.15%

Min. Invest

₹5,000

AUM

₹47.01 Cr

1Y returns

7.12%

Min. Invest

₹1,000

AUM

₹27,150.96 Cr

1Y returns

7.08%

Min. Invest

₹100

AUM

₹72,279.21 Cr

1Y returns

7.08%

Min. Invest

₹100

AUM

₹16,687.08 Cr

1Y returns

7.08%

Min. Invest

₹100

AUM

₹331.15 Cr

1Y returns

7.07%

Min. Invest

₹5,000

AUM

₹10,105.83 Cr

1Y returns

7.04%

Min. Invest

₹5,000

AUM

₹39,858.59 Cr

1Y returns

7.02%

Min. Invest

₹500

AUM

₹7,873.09 Cr

Bandhan Arbitrage - Direct (G)

Bandhan Arbitrage - Direct (G)

Equity | Arbitrage Fund

1Y returns

7.00%

Min. Invest

₹100

AUM

₹8,747.55 Cr

1Y returns

6.99%

Min. Invest

₹5,000

AUM

₹32,195.64 Cr

1Y returns

6.97%

Min. Invest

₹100

AUM

₹23,009.16 Cr

1Y returns

6.97%

Min. Invest

₹100

AUM

₹23,009.16 Cr

1Y returns

6.96%

Min. Invest

₹5,000

AUM

₹3,422.28 Cr

1Y returns

6.94%

Min. Invest

₹5,000

AUM

₹15,894.51 Cr

1Y returns

6.92%

Min. Invest

₹5,000

AUM

₹2,402.56 Cr

1Y returns

6.92%

Min. Invest

₹5,000

AUM

₹1,279.43 Cr

1Y returns

6.90%

Min. Invest

₹100

AUM

₹6,447.92 Cr

1Y returns

6.80%

Min. Invest

₹5,000

AUM

₹288.55 Cr

1Y returns

6.78%

Min. Invest

₹5,000

AUM

₹101.83 Cr

1Y returns

6.70%

Min. Invest

₹500

AUM

₹1,256.94 Cr

1Y returns

6.68%

Min. Invest

₹1,000

AUM

₹295.82 Cr

1Y returns

6.59%

Min. Invest

₹1,000

AUM

₹1,930.24 Cr

JM Arbitrage Fund - Direct (G)

JM Arbitrage Fund - Direct (G)

Equity | Arbitrage Fund

1Y returns

6.53%

Min. Invest

₹1,000

AUM

₹390.54 Cr

1Y returns

6.37%

Min. Invest

₹5,000

AUM

₹43.16 Cr

NJ Arbitrage Fund - Direct (G)

NJ Arbitrage Fund - Direct (G)

Equity | Arbitrage Fund

1Y returns

6.31%

Min. Invest

₹5,000

AUM

₹261.98 Cr

1Y returns

6.13%

Min. Invest

₹1,000

AUM

₹84.67 Cr

1Y returns

%

Min. Invest

₹5,000

AUM

₹535.44 Cr

1Y returns

%

Min. Invest

₹500

AUM

₹1,664.56 Cr

1Y returns

%

Min. Invest

₹5,000

AUM

₹298.20 Cr

1Y returns

%

Min. Invest

₹1,000

AUM

₹91.27 Cr

1Y returns

%

Min. Invest

₹5,000

AUM

₹22.66 Cr

1Y returns

%

Min. Invest

₹5,000

AUM

₹- Cr

1Y returns

%

Min. Invest

₹1,000

AUM

₹241.99 Cr

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What are Arbitrage Funds?

Arbitrage funds are mutual funds that exploit the price differences of securities in different markets or forms. They aim to generate profits by simultaneously buying and selling the same asset in different markets to take advantage of price discrepancies.  

Attributes of Arbitrage Mutual Funds

Knowing attributes helps investors understand their risk-reward profile, tax benefits, and ability to profit from price differences across markets. It also helps in maintaining a relatively low risk compared to equity funds. Here are the attributes you need to note: 
  • Low Risk: Arbitrage funds are considered low risk because they exploit market inefficiencies to generate returns. These funds lock in a risk free profit by simultaneously buying and selling the same asset in different markets. This strategy minimizes exposure to market volatility, making funds a safer investment compared to pure equity funds.
  • Market Neutral: These funds are market neutral, meaning they can perform well regardless of market conditions. Whether the market is bullish or bearish, these funds can produce returns by capitalizing on price discrepancies. This makes them a stable investment option, as their performance is not directly tied to market trends.
  • Short term Investments: These funds are ideal for short term investment horizons. They typically range from a few months to a year. Investors looking for a safe place to park their money for a short period can benefit from these funds' relatively stable returns. The short term nature also means that investors can quickly liquidate their holdings if needed.
  • Holding Period Strategy: Arbitrage debt funds typically perform best when held for short to medium-term periods, usually ranging from 3 months to 1 year. This time frame allows the fund to capitalize on multiple arbitrage opportunities while minimizing the impact of market fluctuations. However, investors should align their holding period with personal financial goals and market conditions, as longer-term holdings may not always yield optimal results.
  • Liquidity: These funds offer high liquidity due to their frequent trading activities. Investors can easily buy and sell units without significantly impacting the fund’s performance. This high liquidity ensures investors can access their money quickly. It makes funds a flexible investment option.
  • Diversification: Arbitrage funds provide diversification benefits by investing in a mix of equities, derivatives, and debt instruments. This diversified approach helps in spreading risk across different asset classes. It further enhances the fund’s stability. Funds can offer more consistent returns by not relying solely on one type of investment.

 

How do Arbitrage Mutual Funds Work?

The arbitrage mutual fund works by buying securities in one market at a lower price. It simultaneously sells them in another market at a higher price. The fund managers exploit these price differentials to create returns. They typically invest in equities and derivatives to lock in the price differences, ensuring a risk free profit.
 

Why Invest in Arbitrage Mutual Funds?

Investing in these funds can be beneficial due to their low risk nature and potential for steady returns. They are ideal for conservative investors looking for short term investment options. Their tax efficiency makes them an attractive choice for investors in higher tax brackets.  

Who Should Invest in Arbitrage Funds?

These funds suit risk-averse investors seeking stable returns with minimal market risk. They benefit those in higher tax brackets looking for tax-efficient returns compared to traditional debt investments like fixed deposits. People who are suitable to invest in arbitrage funds are:
  • Conservative Investors: The investors looking for low risk investment options are correct for this fund.
  • Short term Investors: The option is ideal for those with a short term investment horizon.
  • Tax conscious Investors: The choice is beneficial for those in higher tax brackets due to tax efficiency.
  • Market Neutral Investors: It is suitable for those who want to avoid market volatility.
  •  

Things to Note About While Investing in Arbitrage Mutual Fund Schemes

Understanding these funds is crucial as they involve complex market strategies to profit from price differences. Knowing their mechanics, risks, tax implications, and market dependencies helps investors decide whether they suit their investment goals and risk tolerance. Note the points below to make an investment in arbitrage fund schemes.
  • Expense Ratio:
The expense ratio is a critical factor to consider when investing in the best arbitrage mutual funds. It represents the annual fee that the fund charges its investors to cover management, administrative, and other operating expenses. A higher expense ratio can significantly impact the net returns of the fund, as these costs are deducted from the fund’s overall performance. Therefore, it’s essential to compare the expense ratios of different funds to ensure you’re getting the best value for your investment.
  • Fund Manager’s Expertise:
The success of arbitrage strategies heavily depends on the expertise and experience of the fund manager. A skilled fund manager can effectively identify and exploit arbitrage opportunities, ensuring consistent returns for investors. It’s important to research the fund manager's track record and their experience in managing these funds.
  • Market Conditions:
Arbitrage chances are influenced by market conditions, particularly volatility and liquidity. In a highly volatile market, price discrepancies between different markets or forms of the same asset are more likely to occur, providing more opportunities for arbitrage. Conversely, in stable markets, these opportunities may be limited.
  • Investment Horizon:
These funds are ideal for short term investments, typically ranging from a few months to a year. These funds are designed to take advantage of short term price discrepancies. It makes them suitable for investors looking for a relatively safe place to park their money for a short period.
  • Market Timing Considerations:
The effectiveness of these funds can vary based on market cycles and interest rate environments. During periods of rising interest rates, these funds may become more attractive as they can potentially offer higher returns than traditional debt funds. Conversely, in falling interest rate scenarios, their relative attractiveness might diminish. Investors should consider the prevailing market conditions and economic outlook when timing their investments in these funds.
  • Fund Size:
The size of the arbitrage fund can also impact its performance. Larger funds may face challenges in finding enough arbitrage chances to deploy their capital effectively. This can potentially lead to lower returns. On the other hand, smaller funds may be more nimble and able to capitalize on a wider range of opportunities.
 

Arbitrage Funds and its Danger

While these funds are considered low risk, they are not entirely risk free. The primary risks include liquidity risk, where the fund may not find enough arbitrage chances. There is also execution risk, where the price difference may not be enough to cover transaction costs.  

Taxation Rules Associated with Arbitrage Funds

The best arbitrage funds are treated as equity funds for tax purposes. Short term capital gains are for less than 12 months with taxation at 15%. The long term capital gains are for more than 12 months. The amount exceeds ₹1 lakh. It is taxed at 10% without indexation benefits.

FAQ’s

How are arbitrage mutual funds taxed?
These funds are taxed as equity funds. Short term capital gains are taxed at 15%, and long term capital gains exceeding ₹1 lakh are taxed at 10% without indexation.
What is the typical expense ratio of arbitrage funds?
The expense ratio of the best arbitrage funds typically ranges from 0.5% to 1.5%. This depends on the fund house and the fund’s size.
What is the typical return of arbitrage funds?
Those who have invested in arbitrage mutual funds get returns in the range of 4% to 6% annually. This depends on market conditions and the fund manager’s expertise.
Is there any exit load on arbitrage mutual funds?
Most arbitrage funds do not have an exit load if the investment is held for more than 30 days. However, some funds may charge a nominal exit load for redemptions within 30 days.
Where do Arbitrage mutual funds invest?
These funds invest in equities and derivatives to exploit price differences. They may also invest in debt and money market instruments for liquidity management.

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