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Arbitrage Mutual Funds

We are aware that the equity market is volatile. 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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Arbitrage Mutual Funds List

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logo Invesco India Arbitrage Fund - Direct Growth

8.11%

Fund Size (Cr.) - 19,675

Invest
logo Kotak Equity Arbitrage Fund - Direct Growth

8.14%

Fund Size (Cr.) - 60,373

Invest
logo Edelweiss Arbitrage Fund - Direct Growth

8.08%

Fund Size (Cr.) - 14,003

Invest
logo Tata Arbitrage Fund - Direct Growth

8.12%

Fund Size (Cr.) - 12,792

Invest
logo Bandhan Arbitrage - Direct Growth

8.12%

Fund Size (Cr.) - 7,955

Invest
logo SBI Arbitrage Opportunities Fund - Direct Growth

7.87%

Fund Size (Cr.) - 30,592

Invest
logo Aditya Birla SL Arbitrage Fund - Dir Growth

8.10%

Fund Size (Cr.) - 14,236

Invest
logo Mirae Asset Arbitrage Fund - Direct Growth

7.96%

Fund Size (Cr.) - 3,111

Invest
logo Nippon India Arbitrage Fund - Direct Growth

7.86%

Fund Size (Cr.) - 13,733

Invest
logo ICICI Pru Equity - Arbitrage Fund - Direct Growth

8.01%

Fund Size (Cr.) - 25,727

Invest
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Who Should Invest in Arbitrage Mutual Funds?

Arbitrage funds are balanced or hybrid funds as they invest in both debt and equity, but their primary investments are in equities. Even though Arbitrage funds are relatively low-risk funds, their payoffs, or arbitrage fund returns, are unpredictable. They are another variant of mutual funds. They function on the principle of purchasing stock in the cash market and simultaneously selling off that interest in the futures market. View More

Hence, people who should ideally invest in these funds are:

Those with cash surplus want to make extra earnings instead of keeping them idle in their savings account and earning a very small interest rate.
Anyone looking for a short to medium-term investment strategy should go in for investing in Arbitrage funds.
The term period of 3 to 5 years is ideal for investing in such funds. Hence, those with extra funds and who do not have immediate cash requirements can hold on to them for some time.
Those who desire to profit from volatile markets yet do not want to get involved and invest in high-risk sectors.
These funds charge exit loads. Hence, keeping this in mind, arbitrage funds should be considered for investments only by those who would retain their money in them for at least 3 to 6 months.
These funds are good for people under the higher income bracket, as they can use their surplus funds to invest and earn profits on them.

Popular Arbitrage Mutual Funds

  • Min SIP Investment Amt
  • ₹ ₹ 500
  • AUM (Cr.)
  • ₹ 19,675
  • 3Y Return
  • 7.65%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 60,373
  • 3Y Return
  • 7.55%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 14,003
  • 3Y Return
  • 7.47%

  • Min SIP Investment Amt
  • ₹ ₹ 150
  • AUM (Cr.)
  • ₹ 12,792
  • 3Y Return
  • 7.44%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 7,955
  • 3Y Return
  • 7.39%

  • Min SIP Investment Amt
  • ₹ ₹ 500
  • AUM (Cr.)
  • ₹ 30,592
  • 3Y Return
  • 7.38%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 14,236
  • 3Y Return
  • 7.37%

  • Min SIP Investment Amt
  • ₹ ₹ 99
  • AUM (Cr.)
  • ₹ 3,111
  • 3Y Return
  • 7.34%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 13,733
  • 3Y Return
  • 7.32%

  • Min SIP Investment Amt
  • ₹ ₹ 1000
  • AUM (Cr.)
  • ₹ 25,727
  • 3Y Return
  • 7.31%

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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