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Fincash » Kotak Equity Arbitrage Fund Vs Nippon India Arbitrage Fund

Kotak Equity Arbitrage Fund Vs Nippon India Arbitrage Fund

Updated on January 23, 2020 , 192 views

Kotak Equity Arbitrage Fund and Nippon India Arbitrage Fund (Formerly Reliance Arbitrage Fund) both belong to the arbitrage category of Hybrid Fund. Arbitrage funds are a type of Mutual Funds that leverage on the price differences of different markets to earn profits. Arbitrage Funds are named after the arbitrage strategy that they use. The returns of these funds are dependent on the volatility of the invested asset on the market. They make use of the market inefficiencies to generate returns for their investors. Though both Kotak Equity Arbitrage Fund Vs Nippon India Arbitrage Fund belong to the same category there differ in some parameters like AUM, NAV, performances, etc. So, to make a better investment decision, let's have a look at both the schemes in a detailed manner.

Kotak Equity Arbitrage Fund

Kotak Equity Arbitrage Fund was launched in the year 2005 with an aim to generate capital appreciation by Investing in a derivative segment of the equity market and seek income by investing in arbitrage opportunities in the cash. A portion of the portfolio is invested in debt and money market instruments. Some of the top holdings of the fund (as on 30th June 2018) are Net Current Assets, Kotak Liquid Dir Gr, HDFC Bank Ltd, Axis Bank Ltd, Tata Steel Ltd, etc. Kotak Equity Arbitrage Fund is been currently managed by Deepak Gupta.

Nippon India Arbitrage Fund (Formerly Reliance Arbitrage Fund)

Important Information

From October 2019, Reliance Mutual Fund has been renamed as Nippon India Mutual Fund. Nippon Life has acquired majority (75%) stakes in Reliance Nippon Asset Management (RNAM). The company will continue to run its operations without any change in structure and management.

Nippon India Arbitrage Fund, earlier known as Reliance Arbitrage Fund was launched in the year 2010. The fund seeks to generate income by taking advantage of the arbitrage opportunities that potentially exists between cash and derivative market. As the fund also invests in debt and money market securities, it profits from regular income. Some of the top holdings of Reliance/Nippon India Arbitrage Fund as on 30th June 2018 are Cash Offset For Derivatives, HDFC Bank Ltd, Housing Development Finance Corp Ltd, Axis Bank Ltd, ICICI Bank Ltd. etc. The fund is currently managed jointly by Payal Kaipunjal and Kinjal Desai.

Kotak Equity Arbitrage Fund Vs Nippon India Arbitrage Fund

Though both Kotak Equity Arbitrage Fund Vs Reliance/Nippon India Arbitrage Fund belong to the arbitrage category of hybrid funds, nevertheless; they differ on account of various parameters. So, let us understand the differences between both the schemes based on these parameters that are divided into four sections, namely, basics section, performance section, yearly performance section, and other details section.

Basics Section

Current NAV, Fincash Rating, and Scheme Category are some of the comparable elements that form part of the basics section. It is the first section in the comparison of both the schemes. The comparison of current NAV reveals that there is a drastic difference between the NAV of both the schemes. As on 31st Jul, 2018, the NAV of Kotak Equity Arbitrage Fund was INR 25.3528, while the NAV of Nippon India Arbitrage Fund was INR 18.1855. With respect to the Fincash Rating, it can be said that both the funds are rated as 4-Star. The summary comparison of the basics section is as shown in the table given below.

Parameters
BasicsNAV
Net Assets (Cr)
Launch Date
Rating
Category
Sub Cat.
Category Rank
Risk
Expense Ratio
Sharpe Ratio
Information Ratio
Alpha Ratio
Benchmark
Exit Load
Kotak Equity Arbitrage Fund
Growth
Fund Details
₹27.7097 ↑ 0.01   (0.04 %)
₹17,486 on 31 Dec 19
29 Sep 05
Hybrid
Arbitrage
2
Moderately Low
0.68
4.32
0
0
Not Available
0-30 Days (0.25%),30 Days and above(NIL)
Nippon India Arbitrage Fund
Growth
Fund Details
₹19.8846 ↑ 0.01   (0.04 %)
₹10,528 on 31 Dec 19
14 Oct 10
Hybrid
Arbitrage
3
Moderately Low
1.05
4.28
0
0
Not Available
0-1 Months (0.25%),1 Months and above(NIL)

Performance Section

This section compares the Compounded Annual Growth Rate or CAGR returns of both the schemes at various intervals. Some of the time intervals include 3 Month Return, 6 Month Return, 1 Year Return, and Return since Inception. The comparison of CAGR returns shows that both Kotak Equity Arbitrage Fund and Nippon India Arbitrage Fund has performed closely in many instance. The table given below shows the summary of performance section.

Parameters
Performance1 Month
3 Month
6 Month
1 Year
3 Year
5 Year
Since launch
Kotak Equity Arbitrage Fund
Growth
Fund Details
0.5%
1.3%
2.7%
6.2%
6.2%
6.5%
7.4%
Nippon India Arbitrage Fund
Growth
Fund Details
0.5%
1.2%
2.6%
6.2%
6.2%
6.6%
7.7%

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Yearly Performance Section

The comparison of absolute returns generated by both the schemes for a particular year is compared in the yearly performance section. It is the third section in the comparison of both the schemes.

Parameters
Yearly Performance2018
2017
2016
2015
2014
Kotak Equity Arbitrage Fund
Growth
Fund Details
6.1%
6.3%
5.8%
6.7%
7.5%
Nippon India Arbitrage Fund
Growth
Fund Details
6.2%
6.8%
5.5%
6.6%
8.1%

Other Details Section

It is the last section on the comparison of both the schemes that compares the elements like AUM, minimum SIP and lump sum investment and others. The comparison of AUM reveals that there is a significant difference in the AUM of both the schemes. As on 30th June 2018, the AUM of Kotak Equity Arbitrage Fund was INR 11,764 crore, while of Reliance Arbitrage Fund was INR 8,123 crores. Similarly, the minimum SIP investment for both the schemes is also different. The SIP amount for Nippon India Mutual Fund’s scheme is INR 100 and for Kotak Mutual Fund’s scheme is INR 500. However, the minimum lumpsum amount for both the schemes is the same, that is, INR 5,000. The table given below shows the comparison of other details section.

Parameters
Other DetailsMin SIP Investment
Min Investment
Fund Manager
Kotak Equity Arbitrage Fund
Growth
Fund Details
₹500
₹5,000
Hiten Shah - 0.16 Yr.
Nippon India Arbitrage Fund
Growth
Fund Details
₹100
₹5,000
Kinjal Desai - 1.35 Yr.

Growth of 10k Investments over the years

Growth of 10,000 investment over the years.
Kotak Equity Arbitrage Fund
Growth
Fund Details
DateValue
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
Growth of 10,000 investment over the years.
Nippon India Arbitrage Fund
Growth
Fund Details
DateValue
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

Detailed Portfolio Comparison

Asset Allocation
Kotak Equity Arbitrage Fund
Growth
Fund Details
Asset ClassValue
Cash96.88%
Debt3.38%
Equity Sector Allocation
SectorValue
Financial Services16.16%
Energy9.55%
Basic Materials8.93%
Consumer Defensive7.81%
Consumer Cyclical5.06%
Technology4.97%
Health Care4.17%
Industrials3.96%
Utility2.99%
Communication Services1.8%
Real Estate0.06%
Debt Sector Allocation
SectorValue
Cash Equivalent86.43%
Corporate13.2%
Government0.63%
Credit Quality
RatingValue
AAA100%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
Cash Offset For Derivatives
Derivative Margin | -
66%₹11,441 Cr1,144,145
↑ 67,149
Kotak Liquid Dir Gr
Investment Fund | -
9%₹1,553 Cr3,937,659
↑ 1,515,250
Hdfc Bank Ltd.
Net Current Assets | -
9%₹1,488 Cr
Reliance Industries Ltd.-DEC2019
Derivatives | -
6%-₹964 Cr6,184,500
↑ 6,184,500
Reliance Industries Ltd (Energy)
Equity, Since 31 May 18 | RELIANCE
6%₹959 Cr6,184,500
↑ 816,000
Axis Bank Ltd.
Net Current Assets | -
5%₹945 Cr
HDFC Ltd.-DEC2019
Derivatives | -
5%-₹861 Cr3,730,250
↑ 3,730,250
Housing Development Finance Corp Ltd (Financial Services)
Equity, Since 30 Sep 17 | HDFC
5%₹857 Cr3,730,250
↑ 61,750
ITC Ltd.-DEC2019
Derivatives | -
3%-₹566 Cr22,896,000
↑ 22,896,000
ITC Ltd (Consumer Defensive)
Equity, Since 31 Jul 16 | ITC
3%₹564 Cr22,896,000
↑ 2,904,000
Asset Allocation
Nippon India Arbitrage Fund
Growth
Fund Details
Asset ClassValue
Cash94.81%
Debt4.3%
Other1.18%
Equity Sector Allocation
SectorValue
Financial Services16.65%
Basic Materials9.51%
Technology8.54%
Health Care7.48%
Consumer Cyclical7.22%
Consumer Defensive6.34%
Energy5.08%
Industrials3.54%
Utility1.9%
Communication Services1.54%
Real Estate0.13%
Debt Sector Allocation
SectorValue
Cash Equivalent93.21%
Corporate4.93%
Government0.97%
Credit Quality
RatingValue
AA12.75%
AAA87.25%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
Cash Offset For Derivatives
Derivative Margin | -
68%₹6,975 Cr697,512
↑ 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 Cr2,662,000
↑ 2,662,000
Tata Consultancy Services Ltd (Technology)
Equity, Since 30 Sep 18 | TCS
5%₹547 Cr2,662,000
↑ 883,250
Future on Sun Pharmaceuticals Industries Ltd
Derivatives | -
5%-₹460 Cr10,179,400
↑ 10,179,400
Sun Pharmaceuticals Industries Ltd (Healthcare)
Equity, Since 30 Apr 15 | SUNPHARMA
4%₹458 Cr10,179,400
↑ 896,500
Axis Bank Limited
Certificate of Deposit | -
4%₹375 Cr
Future on Housing Development Finance Corp Ltd
Derivatives | -
3%-₹356 Cr1,544,000
↑ 1,544,000
Housing Development Finance Corp Ltd (Financial Services)
Equity, Since 31 Jan 18 | HDFC
3%₹355 Cr1,544,000
↓ -1,114,500

Thus, based on the above pointers, it can be said that both the schemes differ on account of various parameters. Consequently, investors should be very cautious before investing in any of the Mutual Fund schemes. They should understand the modalities of the scheme completely. Also, if required, they can consult a financial advisor for an opinion. This will help the individuals to attain their goals on time in a hassle-free manner.

Disclaimer:
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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