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7 Best Arbitrage Mutual Funds 2020
Generally, people willing to invest in arbitrage funds look for the best arbitrage funds. But what are Arbitrage funds?
An arbitrage fund is a popular short-term financial investment in India. Arbitrage funds are Mutual Funds that leverage the differential price between the cash market and derivative market to generate mutual fund returns.
The returns generated by arbitrage funds are dependent on the volatility of the stock market. Arbitrage mutual funds are hybrid in nature and in times of high or persistent volatility, these funds offer relatively risk-free returns to investors. Before Investing in these funds it is important to understand arbitrage funds taxation and know the best arbitrage funds.
Why Invest in Arbitrage Funds?
Here are some of the benefits of investing in arbitrage funds:
1. Negligible Risk
Arbitrage funds are not 100% risk-free but they do carry negligible risk. They bank on the mispricing happening in the markets. This gives the investor a safer option compared to other short-term funds since these funds offer better returns during market volatility.
2. Returns
These funds generally give a return of about 7-9% of the amount invested. This is higher compared to Liquid Funds or short-term debt funds in low rate enviornment (When RBI is reducing rate).
Thus, making arbitrage funds a lucrative investment option.
3. Favourable Taxation
One of the biggest benefits of investing in these funds is the tax treatment. Equity Funds attract long term capital gains. If the gains are made up to INR 1 lakh then it counts under tax-free. Tax at 10% applies to gains above INR 1 lakh.
Arbitrage Funds Taxation
As mentioned above, these funds are taxed favourably. They are said to be a combination of good Debt fund returns and the tax treatment of equity mutual funds. If more than 65% of the fund is invested in equity, it will be considered as Equity Funds for taxation. As per the Budget 2018, equity funds would attract Long Term Capital Gains (LTCG). Investors would be taxed at 10% (with no indexation) under long term Capital Gain tax. Gains up to INR 1 lakh are free of tax. Tax at 10% applies to gains above INR 1 lakh. Short-term capital gains from equity attract a 15% concessional rate.
Therefore, if you are planning to make a short-term investment and avail tax benefits along with it, consider investing in arbitrage funds.
Talk to our investment specialist
Top 7 Arbitrage Mutual Funds 2020 - 2021
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 5 YR (%) 2018 (%) Aditya Birla Sun Life Arbitrage Fund Growth ₹19.8967
↑ 0.01 ₹5,493 1.3 2.8 6.3 6 6.4 6.2 Nippon India Arbitrage Fund Growth ₹19.8846
↑ 0.01 ₹10,528 1.2 2.6 6.2 6.2 6.6 6.2 UTI Arbitrage Fund Growth ₹26.1248
↑ 0.01 ₹3,309 1.3 2.7 6.2 6.1 6.4 6.2 BNP Paribas Arbitrage Fund Growth ₹12.058
↑ 0.01 ₹649 1.3 2.8 6.2 6.2 6.2 Edelweiss Arbitrage Fund Growth ₹14.4092
↑ 0.00 ₹3,870 1.3 2.7 6.2 6.1 6.5 6.2 IDFC Arbitrage Fund Growth ₹24.4493
↑ 0.01 ₹11,944 1.2 2.6 6.2 6.1 6.3 6.2 Kotak Equity Arbitrage Fund Growth ₹27.7097
↑ 0.01 ₹17,486 1.3 2.7 6.2 6.2 6.5 6.1 Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 24 Jan 20
*Below is the list of Arbitrage funds sorted on last 1 year return and having AUM > 100 Crore.
(Erstwhile Aditya Birla Sun Life Enhanced Arbitrage Fund) An Open ended Equity Scheme with an investment objective to generate income by investing predominantly in equity and equity related instruments. Scheme intends to take advantage from the price differentials / mis-pricing prevailing for stock / index in various market segments (Cash & Futures). Aditya Birla Sun Life Arbitrage Fund is a Hybrid - Arbitrage fund was launched on 24 Jul 09. It is a fund with Moderate risk and has given a Below is the key information for Aditya Birla Sun Life Arbitrage Fund Returns up to 1 year are on (Erstwhile Reliance Arbitrage Advantage Fund) The investment objective of the scheme is to generate income by taking advantage of the arbitrage opportunities that potentially exists between cash and derivative market and within the derivative segment along with investments in debt securities & money market instruments. Nippon India Arbitrage Fund is a Hybrid - Arbitrage fund was launched on 14 Oct 10. It is a fund with Moderately Low risk and has given a Below is the key information for Nippon India Arbitrage Fund Returns up to 1 year are on (Erstwhile UTI SPREAD Fund) The investment objective of the scheme is to provide capital appreciation and dividend distribution through arbitrage opportunities arising out of price differences between the cash and derivative market by investing predominantly in equity and equity-related securities, derivatives and the balance portion in debt securities. However, there can be no assurance that the investment objective of the scheme will be realised. UTI Arbitrage Fund is a Hybrid - Arbitrage fund was launched on 22 Jun 06. It is a fund with Moderately Low risk and has given a Below is the key information for UTI Arbitrage Fund Returns up to 1 year are on (Erstwhile BNP Paribas Enhanced Arbitrage Fund) The primary investment objective of the scheme is to generate income and capital appreciation by investing in a combination of diversified portfolio of equity and equity related instruments, including use of equity derivatives strategies and arbitrage opportunities with exposure in debt and fixed income instruments. However, there can be no assurance that the investment objectives of the Scheme will be realized. The Scheme does not guarantee/indicate any returns BNP Paribas Arbitrage Fund is a Hybrid - Arbitrage fund was launched on 28 Dec 16. It is a fund with Moderately High risk and has given a Below is the key information for BNP Paribas Arbitrage Fund Returns up to 1 year are on The investment objective of the Scheme is to generate income by predominantly investing in arbitrage opportunities in the cash and the derivative segments of the equity markets and the arbitrage opportunities available within the derivative segment and by investing the balance in debt and money market instruments. However, there is no assurance that the investment objective of the scheme will be realized. Edelweiss Arbitrage Fund is a Hybrid - Arbitrage fund was launched on 27 Jun 14. It is a fund with Moderately Low risk and has given a Below is the key information for Edelweiss Arbitrage Fund Returns up to 1 year are on The investment objective of the Scheme is to generate capital appreciation and
income by predominantly investing in arbitrage opportunity in the cash and
the derivative segments of the equity markets and the arbitrage opportunity
available within the derivative segments and by investing the balance in debt
and money market instruments. However there is no assurance that the
investment objective of the scheme will be realized. IDFC Arbitrage Fund is a Hybrid - Arbitrage fund was launched on 21 Dec 06. It is a fund with Moderately Low risk and has given a Below is the key information for IDFC Arbitrage Fund Returns up to 1 year are on The investment objective of the scheme is to generate capital appreciation and income by predominantly investing in arbitrage opportunities in the cash and derivatives segment of the equity market, and by investing the balance in debt and money market instruments. However, there is no assurance that the objective of the scheme will be realized Kotak Equity Arbitrage Fund is a Hybrid - Arbitrage fund was launched on 29 Sep 05. It is a fund with Moderately Low risk and has given a Below is the key information for Kotak Equity Arbitrage Fund Returns up to 1 year are on 1. Aditya Birla Sun Life Arbitrage Fund
CAGR/Annualized return of 6.8% since its launch. Ranked 7 in Arbitrage category. Return for 2019 was 6.2% , 2018 was 6% and 2017 was 5.6% . Aditya Birla Sun Life Arbitrage Fund
Growth Launch Date 24 Jul 09 NAV (24 Jan 20) ₹19.8967 ↑ 0.01 (0.04 %) Net Assets (Cr) ₹5,493 on 31 Dec 19 Category Hybrid - Arbitrage AMC Birla Sun Life Asset Management Co Ltd Rating ☆☆☆ Risk Moderate Expense Ratio 0.94 Sharpe Ratio 4.78 Information Ratio 0 Alpha Ratio 0 Min Investment 1,000 Min SIP Investment 1,000 Exit Load 0-30 Days (0.5%),30 Days and above(NIL) Growth of 10,000 investment over the years.
Date Value 31 Dec 14 ₹10,000 31 Dec 15 ₹10,760 31 Dec 16 ₹11,459 31 Dec 17 ₹12,102 31 Dec 18 ₹12,830 31 Dec 19 ₹13,622 Returns for Aditya Birla Sun Life Arbitrage Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 24 Jan 20 Duration Returns 1 Month 0.5% 3 Month 1.3% 6 Month 2.8% 1 Year 6.3% 3 Year 6% 5 Year 6.4% 10 Year 15 Year Since launch 6.8% Historical performance (Yearly) on absolute basis
Year Returns 2018 6.2% 2017 6% 2016 5.6% 2015 6.5% 2014 7.6% 2013 8.3% 2012 9.5% 2011 7.1% 2010 7.1% 2009 5.4% Fund Manager information for Aditya Birla Sun Life Arbitrage Fund
Name Since Tenure Lovelish Solanki 15 Dec 14 4.8 Yr. Data below for Aditya Birla Sun Life Arbitrage Fund as on 31 Dec 19
Asset Allocation
Asset Class Value Cash 93.62% Debt 6.65% Equity Sector Allocation
Sector Value Financial Services 19.67% Energy 12.15% Technology 6.38% Basic Materials 6.27% Health Care 5.65% Consumer Defensive 4.22% Consumer Cyclical 3.76% Industrials 2.53% Utility 1.55% Communication Services 1.04% Real Estate 0.14% Debt Sector Allocation
Sector Value Cash Equivalent 88.78% Corporate 11.49% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity Cash Offset For Derivatives
Derivative Margin | -64% ₹3,505 Cr 350,544
↑ 16,886 Future on Reliance Industries Ltd
Derivatives | -9% -₹486 Cr 3,118,000
↑ 3,118,000 Hdfc_(26/12/2019)
Derivatives | -9% -₹484 Cr 2,098,000
↑ 2,098,000 Reliance Industries Ltd (Energy)
Equity, Since 30 Jun 18 | RELIANCE9% ₹484 Cr 3,118,000 Housing Development Finance Corp Ltd (Financial Services)
Equity, Since 30 Apr 18 | HDFC9% ₹482 Cr 2,098,000 Clearing Corporation Of India Limited
CBLO | -4% ₹221 Cr Future on Axis Bank Ltd
Derivatives | -3% -₹183 Cr 2,468,400
↑ 2,468,400 Axis Bank Ltd (Financial Services)
Equity, Since 28 Feb 19 | 5322153% ₹182 Cr 2,468,400
↑ 272,400 Future on Sun Pharmaceuticals Industries Ltd
Derivatives | -3% -₹179 Cr 3,954,500
↑ 3,954,500 Sun Pharmaceuticals Industries Ltd (Healthcare)
Equity, Since 28 Feb 15 | SUNPHARMA3% ₹178 Cr 3,954,500
↑ 426,800 2. Nippon India Arbitrage Fund
CAGR/Annualized return of 7.7% since its launch. Ranked 3 in Arbitrage category. Return for 2019 was 6.2% , 2018 was 6.8% and 2017 was 5.5% . Nippon India Arbitrage Fund
Growth Launch Date 14 Oct 10 NAV (24 Jan 20) ₹19.8846 ↑ 0.01 (0.04 %) Net Assets (Cr) ₹10,528 on 31 Dec 19 Category Hybrid - Arbitrage AMC Nippon Life Asset Management Ltd. Rating ☆☆☆☆ Risk Moderately Low Expense Ratio 1.05 Sharpe Ratio 4.28 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 100 Exit Load 0-1 Months (0.25%),1 Months and above(NIL) Growth of 10,000 investment over the years.
Date Value 31 Dec 14 ₹10,000 31 Dec 15 ₹10,805 31 Dec 16 ₹11,517 31 Dec 17 ₹12,146 31 Dec 18 ₹12,969 31 Dec 19 ₹13,768 Returns for Nippon India Arbitrage Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 24 Jan 20 Duration Returns 1 Month 0.5% 3 Month 1.2% 6 Month 2.6% 1 Year 6.2% 3 Year 6.2% 5 Year 6.6% 10 Year 15 Year Since launch 7.7% Historical performance (Yearly) on absolute basis
Year Returns 2018 6.2% 2017 6.8% 2016 5.5% 2015 6.6% 2014 8.1% 2013 8% 2012 9.7% 2011 9.9% 2010 8.3% 2009 Fund Manager information for Nippon India Arbitrage Fund
Name Since Tenure Kinjal Desai 25 May 18 1.35 Yr. Anand Gupta 12 Sep 18 1.05 Yr. Data below for Nippon India Arbitrage Fund as on 31 Dec 19
Asset Allocation
Asset Class Value Cash 94.81% Debt 4.3% Other 1.18% Equity Sector Allocation
Sector Value Financial Services 16.65% Basic Materials 9.51% Technology 8.54% Health Care 7.48% Consumer Cyclical 7.22% Consumer Defensive 6.34% Energy 5.08% Industrials 3.54% Utility 1.9% Communication Services 1.54% Real Estate 0.13% Debt Sector Allocation
Sector Value Cash Equivalent 93.21% Corporate 4.93% Government 0.97% Credit Quality
Rating Value AA 12.75% AAA 87.25% Top Securities Holdings / Portfolio
Name Holding Value Quantity Cash Offset For Derivatives
Derivative Margin | -68% ₹6,975 Cr 697,512
↑ 50,411 Hdfc Bank Limited
Certificate of Deposit | -10% ₹1,050 Cr Triparty Repo
CBLO/Reverse Repo | -6% ₹592 Cr Future on Tata Consultancy Services Ltd
Derivatives | -5% -₹549 Cr 2,662,000
↑ 2,662,000 Tata Consultancy Services Ltd (Technology)
Equity, Since 30 Sep 18 | TCS5% ₹547 Cr 2,662,000
↑ 883,250 Future on Sun Pharmaceuticals Industries Ltd
Derivatives | -5% -₹460 Cr 10,179,400
↑ 10,179,400 Sun Pharmaceuticals Industries Ltd (Healthcare)
Equity, Since 30 Apr 15 | SUNPHARMA4% ₹458 Cr 10,179,400
↑ 896,500 Axis Bank Limited
Certificate of Deposit | -4% ₹375 Cr Future on Housing Development Finance Corp Ltd
Derivatives | -3% -₹356 Cr 1,544,000
↑ 1,544,000 Housing Development Finance Corp Ltd (Financial Services)
Equity, Since 31 Jan 18 | HDFC3% ₹355 Cr 1,544,000
↓ -1,114,500 3. UTI Arbitrage Fund
CAGR/Annualized return of 7.3% since its launch. Ranked 8 in Arbitrage category. Return for 2019 was 6.2% , 2018 was 6.2% and 2017 was 5.7% . UTI Arbitrage Fund
Growth Launch Date 22 Jun 06 NAV (24 Jan 20) ₹26.1248 ↑ 0.01 (0.04 %) Net Assets (Cr) ₹3,309 on 31 Dec 19 Category Hybrid - Arbitrage AMC UTI Asset Management Company Ltd Rating ☆☆☆ Risk Moderately Low Expense Ratio 0.78 Sharpe Ratio 4.14 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 500 Exit Load 0-30 Days (0.5%),30 Days and above(NIL) Growth of 10,000 investment over the years.
Date Value 31 Dec 14 ₹10,000 31 Dec 15 ₹10,762 31 Dec 16 ₹11,457 31 Dec 17 ₹12,107 31 Dec 18 ₹12,854 31 Dec 19 ₹13,647 Returns for UTI Arbitrage Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 24 Jan 20 Duration Returns 1 Month 0.5% 3 Month 1.3% 6 Month 2.7% 1 Year 6.2% 3 Year 6.1% 5 Year 6.4% 10 Year 15 Year Since launch 7.3% Historical performance (Yearly) on absolute basis
Year Returns 2018 6.2% 2017 6.2% 2016 5.7% 2015 6.5% 2014 7.6% 2013 8.1% 2012 7.7% 2011 8.7% 2010 8.4% 2009 4.8% Fund Manager information for UTI Arbitrage Fund
Name Since Tenure Amit Sharma 2 Jul 18 1.41 Yr. Rajeev Gupta 2 Jul 18 1.41 Yr. Data below for UTI Arbitrage Fund as on 31 Dec 19
Asset Allocation
Asset Class Value Cash 96.49% Equity 0.01% Debt 3.5% Equity Sector Allocation
Sector Value Financial Services 13.73% Technology 10.28% Consumer Cyclical 9.28% Basic Materials 8.81% Consumer Defensive 7.11% Health Care 5.4% Energy 5.32% Industrials 4.42% Utility 0.81% Communication Services 0.31% Debt Sector Allocation
Sector Value Cash Equivalent 83.18% Corporate 15.31% Government 1.49% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity Cash Offset For Derivatives
Derivative Margin | -66% ₹2,131 Cr 213,117
↑ 20,129 Future on HDFC Bank Ltd
Derivatives | -5% -₹170 Cr Housing Development Finance Corp Ltd (Financial Services)
Equity, Since 30 Sep 18 | HDFC5% ₹157 Cr 682,500
↑ 70,500 Tata Consultancy Services Ltd (Technology)
Equity, Since 30 Sep 18 | TCS5% ₹151 Cr 736,750
↑ 591,250 Future on Tata Consultancy Services Ltd
Derivatives | -5% -₹151 Cr Punjab National Bank Std - 366 Daysmargin Deposit
Net Current Assets | -4% ₹127 Cr 00 Future on Reliance Industries Ltd
Derivatives | -4% -₹122 Cr Reliance Industries Ltd (Energy)
Equity, Since 30 Jun 18 | RELIANCE4% ₹122 Cr 783,500
↓ -82,500 Maruti Suzuki India Ltd (Consumer Cyclical)
Equity, Since 30 Sep 19 | MARUTI3% ₹108 Cr 149,475
↑ 137,475 Future on Maruti Suzuki India Ltd
Derivatives | -3% -₹108 Cr 4. BNP Paribas Arbitrage Fund
CAGR/Annualized return of 6.3% since its launch. Return for 2019 was 6.2% , 2018 was 6% and 2017 was 6.4% . BNP Paribas Arbitrage Fund
Growth Launch Date 28 Dec 16 NAV (24 Jan 20) ₹12.058 ↑ 0.01 (0.04 %) Net Assets (Cr) ₹649 on 31 Dec 19 Category Hybrid - Arbitrage AMC BNP Paribas Asset Mgmt India Pvt. Ltd Rating Risk Moderately High Expense Ratio 1.12 Sharpe Ratio 4.29 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 300 Exit Load 0-1 Months (0.25%),1 Months and above(NIL) Growth of 10,000 investment over the years.
Date Value 31 Dec 16 ₹10,000 31 Dec 17 ₹10,643 31 Dec 18 ₹11,282 31 Dec 19 ₹11,983 Returns for BNP Paribas Arbitrage Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 24 Jan 20 Duration Returns 1 Month 0.4% 3 Month 1.3% 6 Month 2.8% 1 Year 6.2% 3 Year 6.2% 5 Year 10 Year 15 Year Since launch 6.3% Historical performance (Yearly) on absolute basis
Year Returns 2018 6.2% 2017 6% 2016 6.4% 2015 2014 2013 2012 2011 2010 2009 Fund Manager information for BNP Paribas Arbitrage Fund
Name Since Tenure Karthikraj Lakshmanan 28 Dec 16 2.92 Yr. Mayank Prakash 28 Dec 16 2.92 Yr. Data below for BNP Paribas Arbitrage Fund as on 31 Dec 19
Asset Allocation
Asset Class Value Cash 100.27% Equity Sector Allocation
Sector Value Basic Materials 11.9% Financial Services 11.1% Industrials 7.7% Consumer Cyclical 7.19% Consumer Defensive 7.12% Technology 5.72% Health Care 4.63% Utility 4.26% Energy 3.47% Communication Services 2.58% Real Estate 0.13% Debt Sector Allocation
Sector Value Cash Equivalent 100.27% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity Net Receivables / (Payables)
Net Current Assets | -72% ₹468 Cr Treps
CBLO/Reverse Repo | -7% ₹48 Cr 91 Days Deposit With Icici Bank Ltd
Certificate of Deposit | -5% ₹35 Cr 349,500,000
↑ 349,500,000 91 Days Deposit With Hdfc Bank Ltd
Certificate of Deposit | -3% ₹21 Cr 210,000,000
↑ 210,000,000 Future on GMR Infrastructure Ltd
Derivatives | -3% -₹21 Cr 9,405,000
↑ 9,405,000 GMR Infrastructure Ltd (Industrials)
Equity, Since 31 Aug 19 | 5327543% ₹21 Cr 9,405,000
↑ 9,135,000 Future on Bajaj Finance Ltd
Derivatives | -3% -₹18 Cr 44,250
↑ 44,250 Bajaj Finance Ltd (Financial Services)
Equity, Since 31 Oct 19 | 5000343% ₹18 Cr 44,250
↑ 5,250 Ujjivan Financial Ser Ltd Fut 26-Dec-19
Derivatives | -3% -₹18 Cr 528,000
↑ 528,000 Ujjivan Financial Services Limited
Equity, Since 31 Oct 19 | -3% ₹18 Cr 528,000
↑ 528,000 5. Edelweiss Arbitrage Fund
CAGR/Annualized return of 6.8% since its launch. Ranked 1 in Arbitrage category. Return for 2019 was 6.2% , 2018 was 6.1% and 2017 was 5.8% . Edelweiss Arbitrage Fund
Growth Launch Date 27 Jun 14 NAV (24 Jan 20) ₹14.4092 ↑ 0.00 (0.03 %) Net Assets (Cr) ₹3,870 on 31 Dec 19 Category Hybrid - Arbitrage AMC Edelweiss Asset Management Limited Rating ☆☆☆☆☆ Risk Moderately Low Expense Ratio 1.12 Sharpe Ratio 4.67 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 500 Exit Load 0-30 Days (0.25%),30 Days and above(NIL) Growth of 10,000 investment over the years.
Date Value 31 Dec 14 ₹10,000 31 Dec 15 ₹10,796 31 Dec 16 ₹11,515 31 Dec 17 ₹12,187 31 Dec 18 ₹12,930 31 Dec 19 ₹13,731 Returns for Edelweiss Arbitrage Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 24 Jan 20 Duration Returns 1 Month 0.5% 3 Month 1.3% 6 Month 2.7% 1 Year 6.2% 3 Year 6.1% 5 Year 6.5% 10 Year 15 Year Since launch 6.8% Historical performance (Yearly) on absolute basis
Year Returns 2018 6.2% 2017 6.1% 2016 5.8% 2015 6.7% 2014 8% 2013 2012 2011 2010 2009 Fund Manager information for Edelweiss Arbitrage Fund
Name Since Tenure Dhawal Dalal 22 Dec 16 2.94 Yr. Bhavesh Jain 27 Jun 14 5.43 Yr. Data below for Edelweiss Arbitrage Fund as on 31 Dec 19
Asset Allocation
Asset Class Value Cash 99.52% Debt 0.78% Equity Sector Allocation
Sector Value Financial Services 17.68% Energy 11.84% Basic Materials 9.78% Consumer Cyclical 5.29% Industrials 5.26% Health Care 4.66% Technology 4.55% Consumer Defensive 3.85% Utility 3.2% Communication Services 2.94% Real Estate 0% Debt Sector Allocation
Sector Value Cash Equivalent 89.74% Corporate 8.65% Government 1.91% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity Cash Offset For Derivatives
Derivative Margin | -69% ₹2,693 Cr 269,258
↑ 13,929 Future on Reliance Industries Ltd
Derivatives | -8% -₹324 Cr 2,080,000
↑ 2,080,000 Future on Housing Development Finance Corp Ltd
Derivatives | -8% -₹324 Cr 1,403,000
↑ 1,403,000 Reliance Industries Ltd (Energy)
Equity, Since 30 Apr 18 | RELIANCE8% ₹323 Cr 2,080,000
↑ 137,000 Housing Development Finance Corp Ltd (Financial Services)
Equity, Since 31 Aug 18 | HDFC8% ₹322 Cr 1,403,000
↑ 3,500 Future on Axis Bank Ltd
Derivatives | -3% -₹125 Cr 1,678,800
↑ 1,678,800 Axis Bank Ltd (Financial Services)
Equity, Since 31 Mar 19 | 5322153% ₹124 Cr 1,678,800
↓ -116,400 HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED
Commercial Paper | -3% ₹121 Cr 12,500,000 Future on ITC Ltd.
Derivatives | -3% -₹114 Cr 4,612,800
↑ 4,612,800 ITC Ltd (Consumer Defensive)
Equity, Since 30 Sep 18 | ITC3% ₹114 Cr 4,612,800
↑ 1,017,600 6. IDFC Arbitrage Fund
CAGR/Annualized return of 7.1% since its launch. Ranked 17 in Arbitrage category. Return for 2019 was 6.2% , 2018 was 6.3% and 2017 was 5.5% . IDFC Arbitrage Fund
Growth Launch Date 21 Dec 06 NAV (24 Jan 20) ₹24.4493 ↑ 0.01 (0.05 %) Net Assets (Cr) ₹11,944 on 31 Dec 19 Category Hybrid - Arbitrage AMC IDFC Asset Management Company Limited Rating ☆ Risk Moderately Low Expense Ratio 1.04 Sharpe Ratio 4.66 Information Ratio 0 Alpha Ratio 0 Min Investment 100 Min SIP Investment 1,000 Exit Load 0-1 Months (0.25%),1 Months and above(NIL) Growth of 10,000 investment over the years.
Date Value 31 Dec 14 ₹10,000 31 Dec 15 ₹10,738 31 Dec 16 ₹11,417 31 Dec 17 ₹12,050 31 Dec 18 ₹12,805 31 Dec 19 ₹13,592 Returns for IDFC Arbitrage Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 24 Jan 20 Duration Returns 1 Month 0.5% 3 Month 1.2% 6 Month 2.6% 1 Year 6.2% 3 Year 6.1% 5 Year 6.3% 10 Year 15 Year Since launch 7.1% Historical performance (Yearly) on absolute basis
Year Returns 2018 6.2% 2017 6.3% 2016 5.5% 2015 6.3% 2014 7.4% 2013 8.5% 2012 9.2% 2011 9.3% 2010 7.9% 2009 5.6% Fund Manager information for IDFC Arbitrage Fund
Name Since Tenure Arpit Kapoor 1 Mar 17 2.25 Yr. Yogik Pitti 27 Jun 13 5.93 Yr. Harshal Joshi 20 Oct 16 2.61 Yr. Data below for IDFC Arbitrage Fund as on 31 Dec 19
Asset Allocation
Asset Class Value Cash 88.88% Debt 11.41% Equity Sector Allocation
Sector Value Financial Services 20.04% Basic Materials 9.51% Technology 6.87% Energy 6.81% Industrials 6.37% Consumer Cyclical 5.59% Consumer Defensive 5.25% Health Care 3.81% Utility 2.9% Communication Services 1.83% Real Estate 0.05% Debt Sector Allocation
Sector Value Cash Equivalent 88.55% Corporate 11.32% Government 0.42% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity Cash Offset For Derivatives
Derivative Margin | -70% ₹8,267 Cr 826,718
↑ 181,887 Axis Bank Limited
Net Current Assets | -10% ₹1,189 Cr Future on Bajaj Finance Ltd
Derivatives | -4% -₹468 Cr 1,142,250
↑ 1,142,250 Bajaj Finance Ltd (Financial Services)
Equity, Since 30 Apr 19 | 5000344% ₹465 Cr 1,142,250
↑ 697,250 Future on Reliance Industries Ltd
Derivatives | -4% -₹443 Cr 2,844,000
↑ 2,844,000 Reliance Industries Ltd (Energy)
Equity, Since 31 Mar 18 | RELIANCE4% ₹441 Cr 2,844,000
↑ 18,000 Hdfc Bank Limited
Net Current Assets | -3% ₹388 Cr Future on Axis Bank Ltd
Derivatives | -3% -₹371 Cr 4,993,200
↑ 4,993,200 Axis Bank Ltd (Financial Services)
Equity, Since 31 Mar 19 | 5322153% ₹369 Cr 4,993,200
↑ 1,044,000 Future on Housing Development Finance Corp Ltd
Derivatives | -3% -₹356 Cr 1,542,250
↑ 1,542,250 7. Kotak Equity Arbitrage Fund
CAGR/Annualized return of 7.4% since its launch. Ranked 2 in Arbitrage category. Return for 2019 was 6.1% , 2018 was 6.3% and 2017 was 5.8% . Kotak Equity Arbitrage Fund
Growth Launch Date 29 Sep 05 NAV (24 Jan 20) ₹27.7097 ↑ 0.01 (0.04 %) Net Assets (Cr) ₹17,486 on 31 Dec 19 Category Hybrid - Arbitrage AMC Kotak Mahindra Asset Management Co Ltd Rating ☆☆☆☆ Risk Moderately Low Expense Ratio 0.68 Sharpe Ratio 4.32 Information Ratio 0 Alpha Ratio 0 Min Investment 5,000 Min SIP Investment 500 Exit Load 0-30 Days (0.25%),30 Days and above(NIL) Growth of 10,000 investment over the years.
Date Value 31 Dec 14 ₹10,000 31 Dec 15 ₹10,750 31 Dec 16 ₹11,465 31 Dec 17 ₹12,135 31 Dec 18 ₹12,902 31 Dec 19 ₹13,684 Returns for Kotak Equity Arbitrage Fund
absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 24 Jan 20 Duration Returns 1 Month 0.5% 3 Month 1.3% 6 Month 2.7% 1 Year 6.2% 3 Year 6.2% 5 Year 6.5% 10 Year 15 Year Since launch 7.4% Historical performance (Yearly) on absolute basis
Year Returns 2018 6.1% 2017 6.3% 2016 5.8% 2015 6.7% 2014 7.5% 2013 9% 2012 9.2% 2011 9.6% 2010 7.5% 2009 6.3% Fund Manager information for Kotak Equity Arbitrage Fund
Name Since Tenure Hiten Shah 3 Oct 19 0.16 Yr. Rukun Tarachandani 9 May 19 0.56 Yr. Data below for Kotak Equity Arbitrage Fund as on 31 Dec 19
Asset Allocation
Asset Class Value Cash 96.88% Debt 3.38% Equity Sector Allocation
Sector Value Financial Services 16.16% Energy 9.55% Basic Materials 8.93% Consumer Defensive 7.81% Consumer Cyclical 5.06% Technology 4.97% Health Care 4.17% Industrials 3.96% Utility 2.99% Communication Services 1.8% Real Estate 0.06% Debt Sector Allocation
Sector Value Cash Equivalent 86.43% Corporate 13.2% Government 0.63% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity Cash Offset For Derivatives
Derivative Margin | -66% ₹11,441 Cr 1,144,145
↑ 67,149 Kotak Liquid Dir Gr
Investment Fund | -9% ₹1,553 Cr 3,937,659
↑ 1,515,250 Hdfc Bank Ltd.
Net Current Assets | -9% ₹1,488 Cr Reliance Industries Ltd.-DEC2019
Derivatives | -6% -₹964 Cr 6,184,500
↑ 6,184,500 Reliance Industries Ltd (Energy)
Equity, Since 31 May 18 | RELIANCE6% ₹959 Cr 6,184,500
↑ 816,000 Axis Bank Ltd.
Net Current Assets | -5% ₹945 Cr HDFC Ltd.-DEC2019
Derivatives | -5% -₹861 Cr 3,730,250
↑ 3,730,250 Housing Development Finance Corp Ltd (Financial Services)
Equity, Since 30 Sep 17 | HDFC5% ₹857 Cr 3,730,250
↑ 61,750 ITC Ltd.-DEC2019
Derivatives | -3% -₹566 Cr 22,896,000
↑ 22,896,000 ITC Ltd (Consumer Defensive)
Equity, Since 31 Jul 16 | ITC3% ₹564 Cr 22,896,000
↑ 2,904,000
Things to consider as an Investor
1. Risk
As trades are carried out on the stock exchange, there’s no counter party risk involved in these funds. Even though the fund manager is buying and selling shares in cash and futures market, there is no risk exposure to equities as is the case with other diversified equity mutual funds. Though the ride looks smooth, do not get too comfortable with these funds. As more people start trading into arbitrage funds, there will be not many arbitrage opportunities available. The spread between cash and future market prices will erode, leaving little for the arbitrage focused investors.
2. Return
Arbitrage Funds may be a good opportunity to make reasonable returns for those who can understand it and then make the most of it. The fund manager tries to generate an Alpha using price differentials in markets. Historically, arbitrage funds have been found to give returns in the range of 7%-8% over a period of 5-10 years. If you are looking to earn moderate returns via a portfolio which has a perfect blend of debt and equity in a volatile market, arbitrage funds may be your thing. However, you need to keep one thing in mind that there are no guaranteed returns in arbitrage funds.
3. Cost
Cost becomes an important consideration while evaluating arbitrage funds. These funds charge an annual fee called expense ratio which is expressed as a percentage of the fund’s assets. It includes fund manager’s fee and fund management charges. Due to frequent trading, arbitrage funds would incur huge transaction costs and has a high turnover ratio. Additionally, the fund may levy exit loads for a period of 30 to 60 days to discourage investors from exiting early. All these costs may lead to increase in the expense ratio of the fund. A high expense ratio puts a downward pressure on your take-home returns.
4. Investment Horizon
Arbitrage funds may be suitable for investors having a short to medium term horizon of 3 to 5 years. As these funds charge exit loads, you may consider them only when you are ready to stay invested for a period of at least 3-6 months. At the same time, you need to understand that fund returns are highly dependent on the existence of high volatility. So, choosing a lump sum investment would make sense over Systematic investment plan (SIPs). In absence of volatility, liquid funds may give better returns than arbitrage funds over the same investment horizon. Hence, you need to keep the overall market scenario in mind while choosing arbitrage funds.
5. Financial Goals
If you have short to medium term Financial goals, then arbitrage funds are your thing. Instead of a regular savings bank account, you may use these funds to park excess funds in order to create an emergency fund and earn higher returns on them. In case you were already invested in riskier havens equity funds, then you may begin a Systematic Transfer Plan (STP) from the equity funds to a less risky haven like arbitrage funds as you approach completion of the financial goal. This would reduce your portfolio’s overall risk profile but at the same time reduce the returns also. You cannot expect to earn double-digit returns in arbitrage funds.
How to Invest in Arbitrage Funds Online?
Open Free Investment Account for Lifetime at Fincash.com.
Complete your Registration and KYC Process
Upload Documents (PAN, Aadhaar, etc.). And, You are Ready to Invest!
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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