Press "Enter" to skip to content

Best Arbitrage Funds to Invest in 2018

Before we dive into the best arbitrage funds, let’s first learn a little bit about Arbitrage Funds and why we should invest in them.

Arbitrage funds can become an alternative to Bank Fixed Deposits.

What is an Arbitrage Fund?

An arbitrage fund is a type of equity mutual fund which rides on the mispricing between the cash markets and the futures markets. The arbitrage opportunities arising out of volatility bring risk-free returns to the investors. These funds are for conservative investors and are a safe option to park money when there is a persistent volatility in the market.

Are Arbitrage Funds Safe?

Arbitrage funds are safe and carry little risk. The fund managers here reduce the risk of equities by hedging against the derivatives. Market volatility doesn’t entail any risk for the investor in the case of arbitrage funds. In fact, arbitrage opportunities exist only when the markets are uncertain.

Are Arbitrage Funds Tax Efficient?

Arbitrage funds invest in stock and equity instruments but don’t carry the market risks. The gains are taxed at 15% if redeemed within 1 year and after 1 year the gains are tax-free.

The dividends from arbitrage funds will not attract tax, as there is no dividend distribution tax on equity funds.

Also Read: Tips to start investing in Debt Funds

Best Arbitrage Funds to Invest for in 2018:

The funds have been selected based on the following parameters –

  1. Consistent performance of the fund in the long run
  2. Value Research Portal Ranking of the fund
  3. High Assets Under Management (AUM)

The below returns are that of a Regular fund. If you go with Direct funds, you can get an extra return of ~0.5-1%.

  • Kotak Equity Arbitrage Fund

This scheme is one of the top funds in the arbitrage category.

The fund has beaten all its peers and given returns of 7.71% in the last 5 years which is quite good and 7.50% in 10 years which shows the funds consistency in the long run.

The AUM for this fund has risen close to 11K cr which shows investors’ confidence in this fund.

This fund is highly regarded by investors and one can start investing in them.

  • ICICI Prudential Equity Arbitrage Fund

This scheme is one of the best funds in the arbitrage category.

The fund has beaten its peers in the long run and given returns of 7.77% in the last 5 years which is good and 7.45% returns in 10 years which shows the funds consistency in the long run.

The AUM for this fund has risen to 10K cr which shows investors’ confidence in this fund.

This fund is highly regarded by investors and one can start investing in them.

  • IDFC Arbitrage Fund

This scheme is also one of the best funds in the arbitrage category.

The fund has done well in the long run and given returns of 7.46% in the last 5 years which is good and 7.07% in 10 years which shows the funds consistency in the long run.

The AUM for this fund has risen close to 3.5K cr which shows investors’ confidence in this fund.

  • Reliance Arbitrage Advantage Fund

This scheme is one of the best funds in the arbitrage category.

The fund has done well in the long run and given returns of 7.62% in the last 5 years which is good and has the capability to perform well in the long run.

The AUM for this fund has risen to 7.6K cr which shows investors’ confidence in this fund.

This fund is highly regarded by investors and one can start investing in them.

Conclusion:

There are many other funds also available but these funds are one of the best funds in the market right now for investment purposes.

You can select funds from the above based on your risk appetite.

The returns may not look great, but if you hold it for 1 year, then it becomes tax-free and can become a much better option than Fixed Deposits for those in the 30% tax bracket.

So, Certainly, people should think about investing in arbitrage funds. Can definitely add these funds to their portfolio.

Friends, please share the article if it’s of help to you.

Also, comment below if you are planning to invest in any of these funds.

4 Comments

  1. shrikant shrikant

    Sir

    Pl share details of Equity savings – which comprises of equity/arbitrage/debts etc . your valuable /knowledgeable info will be great source of investments.

    Thanks

    Shrikant

    • Nikhil Nikhil

      Hi Shrikant,
      I have noted down this topic and will post an article on this soon. Stay tuned!!
      Thanks!!

  2. Rajeev Rajeev

    Hello,
    Which is the best option to park lumsum money “arbitrage or ultra short term”. After parking money in these funds i want to start STP.
    Regards,

    • Nikhil Nikhil

      Hi Rajeev,
      You should do lump sum in a debt fund, so go with ultra short-term or liquid fund.

Leave a Reply

Your email address will not be published. Required fields are marked *