Edelweiss Income Plus Arbitrage Active FOF: Smart Hybrid Approach for Balanced Returns
Nippon India Launched a hybrid NFO - All you need to know

The NFO is an open-ended hybrid Fund of Funds scheme introduced to provide investors with stable returns while navigating market volatilities. It seeks to achieve this by strategically investing in a diversified mix of open-ended debt-oriented schemes and arbitrage funds. By leveraging a dynamic allocation between debt and arbitrage opportunities, the NFO aims to offer lower volatility and better risk-adjusted returns compared to traditional pure equity or debt schemes. The fund also benefits from the active management approach, giving it the flexibility to switch between underlying funds based on changing market conditions, credit risk, interest rate movements, and arbitrage spreads.

Key Features of Nippon India Income Plus Arbitrage Active FOF
- Opening Date: June 2 2025
- Closing Date: June 11 2025
- Minimum Investment Amount: ₹5,000 and in multiples of ₹1 thereafter
- Exit Load: Nil
- Scheme Type: Open-ended hybrid Fund of Funds
- Benchmark: 60% CRISIL Short Term Bond Index + 40% Nifty 50 Arbitrage Index
Objectives of the Nippon India Income Plus Arbitrage Active FOF
The primary objective of the NFO is to generate stable returns for investors by investing in a combination of debt-oriented and arbitrage mutual fund Nippon India Income Plus Arbitrage Active FOF-Dir (G) - NFO. The fund aims to manage market volatility while preserving capital and optimising returns through active allocation strategies.
Investment Strategy of Nippon India Income Plus Arbitrage Active FOF
- Invests primarily in units of debt-oriented and arbitrage mutual fund schemes.
- Flexibility to shift asset allocation between arbitrage and debt based on prevailing market opportunities.
- Evaluation of factors such as arbitrage spreads, credit risk, interest rate risk, and liquidity before investment decisions.
- Part of the corpus may be parked in Government Securities, T-Bills, and repos for liquidity.
- The fund maintains an actively managed portfolio to align with market dynamics.
Risks Associated with Nippon India Income Plus Arbitrage Active FOF
- Exposure to risks associated with the underlying debt and arbitrage schemes.
- NAV of the NFO may be adversely impacted by fluctuations in the underlying funds' performance.
- Expenses may be higher due to dual-layered costs—those of the NFO and the underlying schemes.
- Possible liquidity risk during market stress periods.
- Volatility in arbitrage spreads may affect short-term returns.
- Any policy or structural change in the underlying Nippon India Income Plus Arbitrage Active FOF-Dir (G) - NFO could affect the performance of the NFO.
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Risk Mitigation Strategy by Nippon India Income Plus Arbitrage Active FOF
To manage risks, the NFO adopts a diversified investment approach across multiple debt and arbitrage funds. This ensures that exposure is spread across different interest rate environments, credit profiles, and arbitrage opportunities. The fund managers actively monitor the performance of the underlying Nippon India Income Plus Arbitrage Active FOF-Dir (G) - NFO and rebalance the portfolio based on real-time risk assessments. Additionally, a portion of the portfolio is allocated to liquid assets like Government Securities and T-Bills to manage liquidity needs efficiently. This strategic allocation reduces the impact of volatility and enhances the fund’s ability to meet redemption demands without disruption.
What Type of Investor Should Invest in Nippon India Income Plus Arbitrage Active FOF?
- Investors seeking low to moderate risk exposure with potential for stable returns.
- Those looking for diversification through a combination of debt and arbitrage investments.
- Investors with a short to medium-term investment horizon.
- Ideal for conservative investors wanting to reduce direct exposure to equities while still benefiting from arbitrage opportunities.
- Suitable for investors who prefer active fund management in uncertain or volatile markets.
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