Arbitrage involves the simultaneous purchase and sale transactions of an asset in two different markets (i.e., cash and futures markets) to profit from inefficiencies in the prices across these markets. And the funds that work on this principle are called Arbitrage funds.
Low-risk investment in a volatile market: Market volatility fuels arbitrage mutual funds. As volatility influences prices, these funds profit from the rising cash-futures gap. Short-term investments that buy and sell shares simultaneously to capitalize on price variations are low-risk. These funds buy stable debt if arbitrage possibilities are limited.
Tax-efficient investment :Considering arbitrage funds are primarily invest in equities and equity-related securities -- enjoying up to 65% exposure -- they are treated like equity funds and taxed accordingly. If you stay invested for more than a one year, your gains will be considered long-term capital gains (LTCG) and will be completely tax-free.
However, short-term capital gains (STCG) are taxed at 15%, and LTCG exceeding Rs.1 lakh are taxed at 10%, without the benefit of indexation.
Lets have a closer look.
Now let us jump and check about these top 15 mutual fund schemes.
Kotak Equity Arbitrage Fund
Fund Performance: The Kotak Equity Arbitrage Fund Fund has given 6.11% annualized returns in the past three years and 5.45% in the last 5 years and 6.07% in the last 10 years. The Kotak Equity Arbitrage Fund Fund comes under the Equity category of Kotak Mahindra Mutual Fund.
Minimum Investment Amount: The minimum amount required to invest in Kotak Equity Arbitrage Fund via lump sum is ₹ 100 and via SIP is ₹ 1000.
Scheme Objective: The scheme aims to generate income through arbitrage opportunities emerging out of pricinganomaly between the spot & futures market; and also through deployment of surplus cash in fixed income instruments.
Scheme Manager: Hiten Shah.
Min Amt SIP
: ₹ 1000
AUM in ( Cr.)
: ₹ 47463.74
1 Y Return (%)
: 7.89
Risko-Meter : Low
UTI Arbitrage Fund
Fund Performance: The UTI Arbitrage Fund Fund has given 5.80% annualized returns in the past three years and 5.27% in the last 5 years and 5.93% in the last 10 years. The UTI Arbitrage Fund Fund comes under the Equity category of UTI Mutual Fund.
Minimum Investment Amount: The minimum amount required to invest in UTI Arbitrage Fund via lump sum is ₹ 5000 and via SIP is ₹ 500.
Scheme Objective: The investment objective of the scheme is to provide capital appreciation and dividend distribution through arbitrage opportunities arising out of price differences between the cash and derivative market by investing predominantly in equity & equity related securities, derivatives and the balance portion in debt securities. However, there can be no assurance that the investment objective of the scheme will be realized.
Scheme Manager: Sharwan Kumar Goyal, Amit Sharma, Deepesh Agarwal.
Min Amt SIP
: ₹ 500
AUM in ( Cr.)
: ₹ 5520.72
1 Y Return (%)
: 7.71
Risko-Meter : Low
HDFC Arbitrage Fund
Fund Performance: The HDFC Arbitrage Fund Fund has given 5.80% annualized returns in the past three years and 5.13% in the last 5 years and 5.75% in the last 10 years. The HDFC Arbitrage Fund Fund comes under the Equity category of HDFC Mutual Fund.
Minimum Investment Amount: The minimum amount required to invest in HDFC Arbitrage Fund via lump sum is ₹ 100 and via SIP is ₹ 500.
Scheme Objective: The investment objective of the fund is to generate income by investing predominantly in arbitrage opportunities between cash and derivative market and arbitrage opportunities within the derivative segment and by deployment of surplus cash in debt securities and money market instruments
Fund Performance: The Edelweiss Arbitrage Fund Fund has given 5.93% annualized returns in the past three years and 5.36% in the last 5 years and 6.08% in the last 10 years. The Edelweiss Arbitrage Fund Fund comes under the Equity category of Edelweiss Mutual Fund.
Minimum Investment Amount: The minimum amount required to invest in Edelweiss Arbitrage Fund via lump sum is ₹ 100 and via SIP is ₹ 500.
Scheme Objective: The Scheme seeks to generate income by predominantly investing in arbitrage opportunities in the cash and the derivative segments of the equity markets and the arbitrage opportunities available within the derivative segment and by investing the balance in debt and money market instruments.
Fund Performance: The Invesco India Arbitrage Fund Fund has given 6.17% annualized returns in the past three years and 5.43% in the last 5 years and 5.95% in the last 10 years. The Invesco India Arbitrage Fund Fund comes under the Equity category of Invesco Mutual Fund.
Minimum Investment Amount: The minimum amount required to invest in Invesco India Arbitrage Fund via lump sum is ₹ 1000 and via SIP is ₹ 500.
Scheme Objective: The fund aims to generate income by cashing in on arbitrage opportunities emerging out of pricing mismatch between the cash market and the derivatives market.
