Invesco India Income Plus Arbitrage Active Fund of Fund NFO Details

The Invesco India Income Plus Arbitrage Active Fund of Fund is an open-ended Fund of Fund scheme designed to offer investors a balanced and low-risk investment option by combining actively managed debt-oriented schemes with equity arbitrage strategies. Around 60–65% of the portfolio will be invested in debt schemes, focusing on AAA-rated corporate bonds and government securities with 2–15 year maturities. The remaining 35–40% will be allocated to arbitrage schemes providing fully hedged equity exposure. This structure aims to deliver stable income with enhanced tax efficiency, making it an attractive alternative to traditional debt funds, which are taxed at higher rates. With active management and dynamic rebalancing based on market conditions, this fund offers investors the dual benefits of stability and potential returns through arbitrage opportunities.

Key Features of Invesco India Income Plus Arbitrage Active Fund of Fund

• Opening Date: July 2, 2025
• Closing Date: July 16, 2025
• Exit Load: Nil
• Minimum Investment Amount: ₹1,000
• Fund Manager: Vikas Garg

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Objective of Invesco India Income Plus Arbitrage Active Fund of Fund

The objective of the Invesco India Income Plus Arbitrage Active Fund of Fund-Direct (G) is to generate income by investing in units of actively managed debt-oriented schemes and equity arbitrage schemes. However, there is no guarantee that the scheme will achieve its investment objective.

Investment Strategy of Invesco India Income Plus Arbitrage Active Fund of Fund

• Allocates 60–65% to debt-oriented schemes, primarily the Invesco India Debt Fund.
• Debt investments focus on AAA-rated corporate bonds and government securities with 2–15 year maturity.
• Allocates 35–40% to Invesco India Arbitrage Fund for fully hedged equity exposure.
• Actively managed portfolio with dynamic rebalancing between debt and arbitrage based on market conditions.
• Aims to combine stability from fixed income and returns from price differentials in arbitrage opportunities.
• Offers enhanced tax efficiency with long-term capital gains taxed at 12.5% for investments held beyond 24 months.

Risks Associated with Invesco India Income Plus Arbitrage Active Fund of Fund

• Exposure to debt markets carries interest rate, credit, and liquidity risks.
• Arbitrage opportunities depend on market volatility and may be reduced if market spreads narrow.
• While tax-efficient, returns are not guaranteed and depend on fund performance and market conditions.
• Market fluctuations and changes in economic policies can impact portfolio performance.
• Risk of underperformance if active rebalancing fails to adapt effectively to changing market scenarios.

Risk Mitigation Strategy by Invesco India Income Plus Arbitrage Active Fund of Fund

The Invesco India Income Plus Arbitrage Active Fund of Fund-Direct (G) employs a well-diversified approach by combining two distinct strategies—fixed income and equity arbitrage—designed to offset risks associated with either asset class individually. 
The debt portion focuses on high-quality, AAA-rated instruments and government securities to ensure stability and minimise credit risk. The arbitrage portion is fully hedged to reduce equity market exposure while capitalising on price differentials. 

The fund also benefits from active management, allowing for dynamic rebalancing in response to market changes, which helps manage interest rate, credit, and liquidity risks effectively. Regular monitoring ensures the portfolio remains aligned with the scheme's objectives while maintaining liquidity.

What Type of Investor Should Invest in Invesco India Income Plus Arbitrage Active Fund of Fund?

• Investors seeking relatively stable, low-risk income solutions with tax efficiency.
• Those looking for diversification through a combination of debt and arbitrage strategies.
• Individuals aiming to generate income without taking on significant equity market exposure.
• Investors with a medium-term horizon (2 years+) are willing to benefit from long-term capital gains tax efficiency.
• Suitable for investors who want an alternative to traditional debt funds but with lower volatility than pure equity funds.