5 Best Arbitrage Funds To Invest In 2021

5 Best Arbitrage Funds To Invest In 2021
5 Best Arbitrage Funds To Invest In 2021

What are Arbitrage Funds?

An arbitrage fund is a type of mutual fund that is suitable for investors who want to profit from the markets during high volatility without taking too much risk.

Arbitrage funds work by manipulating the price difference of a stock or asset that should have the same price but doesn’t because of market volatility. Most arbitrage trades took place between Cash and futures segments.

A typical stock purchase is made with the expectation that it will be sold when the price goes up. Instead, an arbitrage fund purchase is done to gain profits from the stock immediately by buying in the Cash market and selling in futures contracts at the same time.

For example, you buy Reliance in Cash for 2000 and sell in a Futures contract for 2010. Usually, the price differences of the stock in these two segments are very small. As a result, arbitrage funds have to execute a large number of trades to make a good profit.

Pros of Investing in arbitrage funds:

Treated as equity funds: Assuming you hold your shares in an
arbitrage fund for more than one year, then the gains you will
receive are taxed at the Capital gains rate. Which is much lower
than the ordinary income tax rate.

Low Risk: In the case of arbitrage funds buying and selling happens simultaneously unlike long-term investing hence it’s a low but definite profit scheme.

Cons of Investing in arbitrage funds:

High Expense ratio: Since a lot of trades are required for
successful arbitrage funds, which directly hit their expense ratio. As a result, the expense ratios of these funds are quite high.

Best Performing Arbitrage Funds

L&T arbitrage opportunities fund

L&T Arbitrage Opportunities fund is a hybrid mutual fund scheme from L&T Mutual Fund. This fund was launched 7 years ago on 30 Jun 2014. It has an AUM of ₹3,494.07 Crores.

Its respective managers are Jalpan Shah, Venugopal Manghat, Praveen Ayathan. L&T Arbitrage Opportunities Fund has performed in the described way in last 1 year is 4.20%, in last 3 years is 18.90% and 55.54% since scheme launch.

The minimum SIP amount to invest in this scheme is ₹500.

Scheme Details

Aum ₹3,494.07 Cr
Category Hybrid: Arbitrage
Launch Date 30 Jun 2014
Fund Type Open-End
Rating 4/5

 

Scheme Objective

The main objective of the scheme is to generate reasonable returns by predominantly investing in arbitrage opportunities in the cash and derivatives segments of the equity markets

UTI Arbitrage Fund

UTI Arbitrage Fund Direct-Growth is also a hybrid mutual fund
scheme by UTI mutual fund. This scheme was launched around 8 years ago on 01 Jan 2013. It has an AUM of ₹3,842.80 Crores and the latest NAV declared is ₹28.579 as of 06 May 2021.

And is currently managed by its fund managers Amit Sharma, Shrawan Kumar Goyal, and Rajeev Gupta. UTI Arbitrage Fund return performance is described as in last 1 year is 4.05%, in last 3 years is 18.55% and 73.41% since scheme launch.

The minimum SIP amount to invest in this scheme is ₹500.

Scheme Details

Aum ₹3,842.80 Cr
Category Hybrid: Arbitrage
Launch Date 01 Jun 2013
Fund Type Open-End
Rating 4/5

 

Scheme Objective

The scheme’s objective is capital appreciation through arbitrage opportunities not only through cash and derivative market but also arbitrage opportunities within the derivative segment.

Kotak Equity Arbitrage Fund

Kotak Equity Arbitrage Fund Direct-Growth is a hybrid mutual
fund scheme from Kotak Mahindra mutual fund. This scheme was
launched 8 years ago on 01 Jan 2013.

It has an AUM of ₹17,835.16 Crores and the latest NAV declared is ₹30.405 as of 06 May 2021. Currently managed by its fund manager Hiten Shah. Kotak Equity Arbitrage Fund has performed in the described way.

In last 1 year is 4.03%, in last 3 years is 18.62% and 79.12% since scheme launch. The minimum SIP amount to invest in this scheme is ₹500.

Scheme Details

Aum ₹17,835.16 Cr
Category Hybrid: Arbitrage
Launch Date 01 Jun 2013
Fund Type Open-End
Rating 4/5

 

Scheme Objective

The main aim of the scheme is to generate income through arbitrage opportunities emerging out of pricing difference between the spot & futures market and also through the deployment of surplus cash in fixed income instruments.

Nippon India Arbitrage Fund

Nippon India Arbitrage Fund is also a hybrid mutual fund scheme
by Nippon India mutual fund. This scheme was also launched 8 years ago on 01 Jan 2013. It has an AUM of ₹10,211.20 Crores and the latest NAV declared is ₹21.915 as of 06 May 2021.

Currently, it is managed by its fund managers Anju Chhajer and Aanand Debendar. Nippon India Arbitrage Fund return performance in the last 1 year is 4.11%, in last 3 years is 19.19% and 80.31% since scheme launch. The minimum SIP amount to invest in this scheme is ₹100.

Scheme Details

Aum ₹10,211.20 Cr
Category Hybrid: Arbitrage
Launch Date 01 Jun 2013
Fund Type Open-End
Rating 5/5

 

Scheme Objective

The Fund generates income by taking advantage of the arbitrage
opportunities that potentially exist between cash and derivative market and within the derivative segment along.

Aditya Birla Sun Life Arbitrage Fund

Aditya Birla Sun Life Arbitrage Fund is also a hybrid mutual fund
scheme from Aditya Birla sun life mutual fund. This scheme was
launched 8 years by now on 01 Jan 2013.

It has an AUM of ₹5,552.42 Crores and the latest NAV declared is ₹21.876 as of 06 May 2021. and is currently managed by its fund manager Lovenish Solanki.

Aditya Birla Sun Life Arbitrage Fund Scheme has performed in describe way in last 1 year is 3.96%, in last 3 years is 18.57% and 78.10% since scheme launch.

Unlike other funds, the minimum SIP amount to invest in this scheme is ₹1000.

Scheme Details

Aum ₹5,552.42 Cr
Category Hybrid: Arbitrage
Launch Date 01 Jun 2013
Fund Type Open-End
Rating 3/5

 

Scheme Objective

This scheme generates profit by investing predominantly in equity and equity-related instruments. Due to the price difference in stock or index in various market segments.

Also Read: The Best Mutual Fund Scheme For Lump Sum Investment

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He is pursuing BBA, a Passionate trader and his hobby is to write content on business and finance.

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