The new fund offer or the NFO of the scheme will open for subscription on October 23 and it will close on October 27. The scheme will re-open for continuous sale and repurchase on November 3.
According to the scheme information document, 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.
The performance of the scheme will be benchmarked against Nifty 50 Arbitrage Total Return Index (TRI). The scheme will be managed by Rajeev Thakkar and Raunak Onkar, Rukun Tarachandani (equity investments), and Raj Mehta (debt investments).
The minimum investment application amount will be Rs 1,000 and in multiples of Re 1 thereafter. The minimum application amount for monthly SIP will be Rs 1,000 and in multiples of Re 1 thereafter and for quarterly SIP will be Rs 3,000 and in multiples of Re 1 thereafter.
The scheme will have both regular and direct plans with growth option only. The scheme will allocate 65-100% in equities and equity derivatives (equity hedged exposure), 0-35% in debt securities and money market instruments including margin money deployed in derivatives transactions. The scheme is suitable for investors who are seeking to generate income by investing in arbitrage opportunities and want to predominantly invest in arbitrage opportunities in the cash and derivatives segment of the equity market. The principal invested in this scheme will be at low risk.
Should you invest? ETMutualFunds always ask investors to invest in an NFO only if it offers something unique – that is, some investment option that is not available in the market or adding something to the existing available option.
There are around 26 schemes already in the category. Around 19 schemes have a performance record of around five years. The arbitrage category has given an average return of around 5.44% in 2023 so far. If you are looking for our recommendations, see: Best arbitrage mutual funds to invest in 2023
Arbitrage funds are typically recommended to investors to park money for a year or more for better post-tax returns. These schemes are treated like equity schemes and investments will qualify for LTCG tax of 10% if held over a year.
