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Fincash » Kotak Equity Arbitrage Fund Vs Reliance Arbitrage Fund

Kotak Equity Arbitrage Fund Vs Reliance Arbitrage Fund

Updated on November 18, 2019 , 152 views

Kotak Equity Arbitrage Fund and 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 Reliance 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.

Reliance Arbitrage Fund

Reliance Arbitrage Fund, earlier known as Reliance Arbitrage Advantage 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 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 Reliance Arbitrage Fund

Though both Kotak Equity Arbitrage Fund Vs Reliance 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 Reliance 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
₹27.4761 ↑ 0.01   (0.05 %)
₹16,198 on 31 Oct 19
29 Sep 05
Hybrid
Arbitrage
2
Moderately Low
0.68
4.45
0
0
Not Available
0-30 Days (0.25%),30 Days and above(NIL)
Reliance Arbitrage Fund
Growth
Fund Details
₹19.7251 ↑ 0.01   (0.06 %)
₹9,497 on 31 Oct 19
14 Oct 10
Hybrid
Arbitrage
3
Moderately Low
1.05
4.46
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 Reliance 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
0.4%
1.3%
3%
6.2%
6.1%
6.6%
7.4%
Reliance Arbitrage Fund
Growth
Fund Details
0.3%
1.2%
3%
6.3%
6.2%
6.7%
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
6.3%
5.8%
6.7%
7.5%
9%
Reliance Arbitrage Fund
Growth
Fund Details
6.8%
5.5%
6.6%
8.1%
8%

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 Reliance 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 Yr.
Reliance 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 Oct 14₹10,000
31 Oct 15₹10,773
31 Oct 16₹11,478
31 Oct 17₹12,160
31 Oct 18₹12,947
31 Oct 19₹13,758
Growth of 10,000 investment over the years.
Reliance Arbitrage Fund
Growth
Fund Details
DateValue
31 Oct 14₹10,000
31 Oct 15₹10,856
31 Oct 16₹11,545
31 Oct 17₹12,212
31 Oct 18₹13,053
31 Oct 19₹13,880

Detailed Portfolio Comparison

Asset Allocation
Kotak Equity Arbitrage Fund
Growth
Fund Details
Asset ClassValue
Cash97.64%
Debt2.69%
Equity Sector Allocation
SectorValue
Financial Services19.32%
Energy9.17%
Basic Materials7.9%
Technology6.88%
Consumer Defensive6.8%
Consumer Cyclical4.26%
Industrials3.83%
Health Care3.71%
Utility2.93%
Communication Services0.98%
Real Estate0.45%
Debt Sector Allocation
SectorValue
Cash Equivalent87.61%
Corporate10.96%
Government1.63%
Credit Quality
RatingValue
AAA100%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
Cash Offset For Derivatives
Derivative Margin | -
66%₹10,770 Cr1,076,996
↑ 12,162
Hdfc Bank Ltd.
Certificate of Deposit | -
11%₹1,724 Cr
Kotak Liquid Dir Gr
Investment Fund | -
6%₹951 Cr2,422,409
↑ 1,135,299
Reliance Industries Ltd.-NOV2019
Derivatives | -
5%-₹790 Cr5,368,500
↑ 5,368,500
Reliance Industries Ltd (Energy)
Equity, Since 31 May 18 | RELIANCE
5%₹786 Cr5,368,500
↓ -108,000
HDFC Ltd.-NOV2019
Derivatives | -
5%-₹784 Cr3,668,500
↑ 3,668,500
Housing Development Finance Corp Ltd (Financial Services)
Equity, Since 30 Sep 17 | HDFC
5%₹782 Cr3,668,500
↑ 24,500
Axis Bank Ltd.
Certificate of Deposit | -
4%₹646 Cr
ITC Ltd.-NOV2019
Derivatives | -
3%-₹517 Cr19,992,000
↑ 19,992,000
ITC Ltd (Consumer Defensive)
Equity, Since 31 Jul 16 | ITC
3%₹515 Cr19,992,000
↑ 3,144,000
Asset Allocation
Reliance Arbitrage Fund
Growth
Fund Details
Asset ClassValue
Cash97.55%
Debt1.31%
Other1.49%
Equity Sector Allocation
SectorValue
Energy0.32%
Basic Materials0.06%
Debt Sector Allocation
SectorValue
Cash Equivalent92.7%
Corporate5.11%
Government1.05%
Credit Quality
RatingValue
AA10.68%
AAA89.32%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
Cash Offset For Derivatives
Derivative Margin | -
68%₹6,471 Cr647,101
↓ -4,447
Hdfc Bank Limited
Certificate of Deposit | -
12%₹1,100 Cr
Reliance Industries Limited_28/11/2019 (Energy)
Derivatives | RELIANCE
6%-₹606 Cr4,124,000
↑ 4,124,000
Reliance Industries Ltd (Energy)
Equity, Since 31 Dec 17 | RELIANCE
6%₹604 Cr4,124,000
↓ -1,485,500
Housing Development Finance Corporation Limited_28/11/2019 (Financial Services)
Derivatives | HDFC
6%-₹568 Cr2,658,500
↑ 2,658,500
Housing Development Finance Corp Ltd (Financial Services)
Equity, Since 31 Jan 18 | HDFC
6%₹567 Cr2,658,500
↓ -424,000
Net Current Assets
Net Current Assets | -
5%₹429 Cr
Tata Consultancy Services Limited_28/11/2019 (Technology)
Derivatives | TCS
4%-₹405 Cr1,778,750
↑ 1,778,750
Tata Consultancy Services Ltd (Technology)
Equity, Since 30 Sep 18 | TCS
4%₹404 Cr1,778,750
↓ -561,750
Sun Pharmaceutical Industries Limited_28/11/2019 (Healthcare)
Derivatives | SUNPHARMA
4%-₹403 Cr9,282,900
↑ 9,282,900

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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