Invest in Best Arbitrage Hybrid Funds in India 2024
Discover the best Arbitrage Funds to invest in India for 2024. Learn who should invest, key benefits, risks, and find the top performing Arbitrage funds.
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What is Arbitrage hybrid Funds?
Arbitrage funds are the ones that take price difference between live market and derivative market (future market) to generate returns. These funds buy securities in the cash market and sell them simultaneously at future market, benefitting from the price difference. These are generally considered as low risk options and often used as a safe investment option during volatile market conditions
Who should invest in Arbitrage Funds?
- Risk-Averse Investors: Individuals looking for low-risk investment options with average returns
- Short-Term Investors: The trade happens in a short duration, typically, people who are looking at short-term investing options can invest here
- Volatile Market Investors: Investors looking for some returns which will offer stability during volatile market condition s
- Liquid Investment Seekers: Investors needing liquidity and prefer investments that can easily be converted into cash
Best performing Arbitrage Mutual Funds
| Fund name | Category | Risk | 6 months return | 1 year returns | Rating | Fund Size in crores |
| Kotak Equity Arbitrage | Arbitrage MF | Low | 4.10% | 8.06% | 5 | 47999 |
| Tata Arbitrage Fund | Arbitrage MF | Low | 3.85% | 7.64% | 5 | 11519 |
| Invesco India Arbitrage | Arbitrage MF | Low | 3.91% | 7.81% | 4 | 16489 |
| Edelweiss Arbitrage Fund | Arbitrage MF | Low | 4.02% | 7.82% | 4 | 11876 |
| Nippon India Arbitrage Fund | Arbitrage MF | Low | 3.89% | 7.69% | 4 | 15072 |
Factors to Consider While Investing in Arbitrage Funds
- Market Conditions: Arbitrage opportunities are present more in volatile markets and they come with average returns
- Expense Ratio: Consider the expense ratio as it can significant cut down your profit margin
- Investment tenure: It is important to stay invested over a period of 3-6 months and also please note this carries an exit load
- Financial goals: It is appropriate only when you are looking to serve your medium term financial goals.
Major Benefits of Arbitrage Funds
- Low Risk: These funds are considered low-risk as they exploit price differences with hedged positions
- Stable Returns: They generate significantly higher returns than a savings account, they can also provide you stable returns under volatile conditions
- Tax Efficiency: Treated as equity funds for tax purposes, invests atleast 65% in equity shares
- Liquidity: Offers high liquidity, allowing investors to access their funds relatively quickly.
Risks Involved in Arbitrage Funds
- Limited Arbitrage Opportunities: The opportunities for arbitrage are less compared to other source of funds
- Interest and Credit risk: A portion of your investments goes into debt, which can possibly be subject to interest and credit risks
- Flat markets: When markets are flat everywhere, arbitrage funds give you limited earning opportunities
- Regulatory Risk: Changes in market regulations can impact arbitrage opportunities and fund performance.
- Expense ratio: The expense ratio for arbitrage is high which leaves you with more deductions
Frequently Asked Questions (FAQs) about Arbitrage Funds
1. What are Arbitrage Funds?
Arbitrage Funds invests in the price difference between CURRENT and future markets to generate returns
2. Who should consider investing in Arbitrage Funds?
Risk averse, short term investors, those who are looking for stability during volatile market activity can consider investing in these funds
3. What are the potential benefits of investing in Arbitrage Funds?
Low risk, high liquidity, lower volatility, and tax efficiency are some of the benefits of investing in Arbitrage funds
4. What risks are associated with Arbitrage Funds?
Since the funds are bought and sold at the same time, there is not much risk involved in it
5. How do I choose the best Arbitrage Fund?
Consider factors like historical performance, your risk tolerance, expense ratio, fund manager’s track record, and your investment goals before choosing the fund. You can seek the assistance of Fincover, whose MF experts would consider you pick the best Arbitrage fund in the market
- Tata Mutual Fund
- Canara Robeco Mutual Fund
- PPFAS Mutual Fund
- Nippon India Mutual Fund
- HSBC Mutual Fund
- SBI Mutual Fund
- Edelweiss Mutual Fund
- PGIM India Mutual Fund
- LIC Mutual Fund
- Bandhan Mutual Fund
- Quantum Mutual Fund
- HDFC Mutual Fund
- Axis Mutual Fund
- ITI Mutual Fund
- Kotak Mutual Fund
- ICICI Prudential MF
- Aditya Birla Sunlife MF
- DSP Mutual Funds
- Mirae Asset Mutual Fund
- Motilal Oswal Mutual Fund
- Sundaram Mutual Fund
- Invesco Mutual Fund
- Taurus Mutual Fund
- Whiteoak Capital MF
- Quant Mutual Fund
- JM Financial MF
- UTI Mutual Fund
- Baroda BNP Paribas MF
- Franklin Templeton MF
- Union Mutual Fund
