• Arbitrage Mutual Funds

We are aware that the equity market is highly volatile. However, masters of the trade capitalize on this volatility to leverage and use them to spin investment opportunities for them. Arbitrage funds focus on leveraging this market volatility. They function on buying and selling securities, commodities, or currencies simultaneously from different diverse markets to derive benefits from the difference in their price points at various vends. View More

In simpler words, an arbitrage fund is an equity fund that invests in equity derivative instruments, like stocks, and plays on the price advantage between two market segments.

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Who Should Invest in Arbitrage Mutual Funds?

Features of Arbitrage Mutual Funds

Factors to consider while investing in Arbitrage Funds

Taxability of Arbitrage Funds

Risks Involved With Arbitrage Funds

Advantage of Arbitrage Mutual Funds

Popular Arbitrage Mutual Funds - Best Arbitrage Funds to Invest in 2024

  • Min SIP Investment Amt
  • ₹ ₹ 500
  • AUM (Cr.)
  • ₹ 17,362
  • 3Y Return
  • 7.04%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 53,423
  • 3Y Return
  • 6.86%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 12,305
  • 3Y Return
  • 6.82%

  • Min SIP Investment Amt
  • ₹ ₹ 500
  • AUM (Cr.)
  • ₹ 32,415
  • 3Y Return
  • 6.80%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 5,578
  • 3Y Return
  • 6.70%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 15,827
  • 3Y Return
  • 6.69%

  • Min SIP Investment Amt
  • ₹ ₹ 150
  • AUM (Cr.)
  • ₹ 11,802
  • 3Y Return
  • 6.68%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 6,723
  • 3Y Return
  • 6.64%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 13,316
  • 3Y Return
  • 6.62%

  • Min SIP Investment Amt
  • ₹ ₹ 99
  • AUM (Cr.)
  • ₹ 2,560
  • 3Y Return
  • 6.62%

FAQs

Arbitrage funds offer an optimal mix of equity and debt. It invests 65% of its Asset Under Management (AUM) in equity and the remaining in high-quality debt instruments. So, any semi-aggressive or conservative investor can invest in these funds.

The expense ratio eats into the profit from a mutual fund. Fortunately, arbitrage funds’ expense ratios are some of the lowest among equity mutual funds. Generally, direct growth arbitrage funds’ expense ratio hovers between 0.30% and 0.45%.

Arbitrage funds are taxed like any equity fund. For instance, you must pay an LTCG (Long Term Capital Gains) tax of 10%, along with Surcharge and Cess, if you sell your units one year from the investment date.

However, selling your units before one year will be treated as STCG (Short Term Capital Gains), and you have to pay a tax of 15% plus surcharge and cess. However, if your income from equity funds is less than INR 1 lakh a financial year, you don’t have to pay any taxes.

A quick look at the best arbitrage mutual funds reveals that these funds generally deliver annualized returns in the range of 4.85% and 6.88%. However, checking an arbitrage mutual fund’s historical returns is good before investing.

Exit load refers to an investor’s fee for withdrawing money before a specific period. Arbitrage mutual funds generally levy exit loads between 0.25% and 1%.

Tata Arbitrage Fund, Edelweiss Arbitrage Fund, Axis Arbitrage Fund, Invesco India Arbitrage Fund, and Kotak Equity Arbitrage Fund are some of the top arbitrage mutual funds in India.

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