The scheme aims to provide investors with an opportunity 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.
The minimum amount of investment is Rs. 1,000 and in multiples of Rs. 1 thereafter. The scheme will reopen on November 3.
The performance of the scheme will be benchmarked against the Nifty 50 Arbitrage Fund Total Return Index (TRI). Rajeev Thakkar, Raunak Onkar, Raj Mehta and Rukun Tarachandani will manage the scheme.
The scheme will offer only ‘Growth Options’ under both Direct and Regular plans.
“We are excited to launch our new arbitrage fund,” said Neil Parag Parikh, Chairman and CEO of PPFAS Mutual Fund. “This fund will provide investors with a low-risk, tax-efficient way to generate returns from the arbitrage opportunity in the Indian equity market. The Fund can be advantageous to investors in an income tax bracket which benefits from the relatively tax-advantaged status which arbitrage funds enjoy compared to non-equity-oriented funds.”Arbitrage is the simultaneous buying and selling of the same asset in different markets to profit from the price difference. In the Indian equity market, there is often a price difference between the cash market and the futures market. Arbitrageurs can capitalise on this price difference to generate returns.Rajeev Thakkar, Chief Investment Officer, PPFAS Mutual Fund, said, “An arbitrage fund allows investors to use equity-oriented funds in a low-risk manner. Our traditional equity products require a long-term investment horizon. An arbitrage fund can meet the needs of short to medium-term investors. A section of our investor base has been keen to have such a scheme and we are glad that this fills a gap in our product offerings.”
The Parag Parikh Arbitrage Fund will invest in a basket of stocks that are expected to have a positive price difference between the cash market and the futures market.
