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Aditya Birla Capital LimitedAditya Birla Capital Limited (“ABCL”) is a listed systemically important non-deposit taking Non-Banking Financial Company (NBFC) and the holding company of the financial services businesses. Through its subsidiaries/JVs, ABCL provides a comprehensive suite of financial solutions across Loans, Investments, Insurance, and Payments to serve the diverse needs of customers across their lifecycles. Powered by over 59,000 employees, the businesses of ABCL have a nationwide reach with
over 1,482 branches and more than 200,000 agents/channel partners along with several bank partners.
Nationwide Branches
1,482
No. of Employees
59,000
Agents/Channel Partners
2,00,000+
Aggregate Assets
INR 3,550 Billion
Active Customer Base
39 Million
Consolidated Lending Book
INR 699 BillionABCL
Corporate Governance Policies
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Corporate Governance Policies
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Arbitrage Mutual Funds
- Average returns - Dynamic
- Number of funds - (Static)
What is a Arbitrage Fund ?
An Arbitrage Fund is an open-ended, equity-oriented hybrid scheme that invests in equity market arbitrage opportunities.
Advantages of Arbitrage Funds
All-weather returns
Arbitrage funds have the ability to deliver returns in both bullish and bearish markets as they cash in on the price differential between spot and derivatives markets.
Portfolio diversification
Enjoy a diversified portfolio of equity arbitrage opportunities and get good returns on your investment.
Low risk
Arbitrage funds do not exhibit a high volatility risk despite investing in equity. This is because they invest in arbitrage opportunities, which are a hedge against risks.
Explore Arbitrage Funds
AUM: 23427(Cr)
Risk: Very High
- MIN. INVESTMENT 500
- 5 YRS RETURNS 33.32%
- Invest (Per Month) ₹10000
- Get (30 Yrs) ₹24,850*
*Projections/estimations is backtested using historical data.
- AUM: 23427(Cr)
- Risk: High
- MIN. INVESTMENT 1000
- 5 YRS RETURNS 33.32%
- Invest (Per Month) ₹15000
- Get (30 Yrs) ₹34,850*
*Projections/estimations is backtested using historical data.
Arbitrage Funds Returns Calculator
REGULAR INVESTMENT
SIP
Invest systematically in regular amounts and build a corpus with a disciplined investing habit.
START SIPONE TIME INVESTMENT
Lump sum
Invest once with the facility of lump sum investing and save at your will. Time the market correctly and earn good returns.
INVEST LUMPSUMTotal Amount Invested
₹ 0
after 30 years you will get a return of
₹ 0
Disclaimer: Projections/estimations is backtested using historical data.
Total Amount Invested
₹ 0
after 30 years you will get a return of
₹ 0
Disclaimer: Projections/estimations is backtested using historical data.
ABCD - One app to build a diversified investment portfolio
Invest in mutual funds online with the ABCD app and build your portfolio one click at a time.
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Online investments with a fully integrated digital platform
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Facility to switch, redeem and invest more from a single platform
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Understanding Arbitrage Funds
Table of Contents
What are Arbitrage Funds?
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There are two types of equity markets - spot markets and derivatives markets. The price of an equity security differs in both these markets, creating arbitrage opportunities. Arbitrage Funds are equity-oriented hybrid funds which invest in these arbitrage opportunities and cash in on the price differential of the equity security under both the markets.
What are the features of Arbitrage Funds?
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Minimum 65% allocation in equity arbitrage opportunities
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The volatility risk is quite low, while returns are good
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Suitable for all investment horizons
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Invest through SIPs or lump sum
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Earn tax-free returns up to Rs.1 lakh if you stay invested for 12 months or more
What are the different types of hybrid funds?
Aggressive Hybrid Funds
Funds that invest 65% to 80% of their portfolio in equity and the rest in debt
Equity Savings Funds
Funds that invest in equity, debt and arbitrage opportunities. A minimum of 65% of the portfolio is invested in equity and 10% in debt
Balanced Hybrid Fund
Hybrid Mutual Funds which invest 40% to 60% of the portfolio in equity and the remainder in debt
Multi-Asset Allocator Fund
Funds that invest at least 10% of the portfolio in three different asset classes
Conservative Hybrid Fund
Hybrid funds which invest 75% to 90% of the portfolio in debt and the remainder in equity
How do Arbitrage Funds work?
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Arbitrage Funds collect investments from different investors and pool them into a corpus
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Fund managers identify arbitrage opportunities in the equity market
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Arbitrage opportunities are when the price of an equity security is different in the spot or cash market and the futures or derivatives market
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For instance, a share trading at Rs 400 in a spot market and Rs 410 in a futures market creates an arbitrage opportunity
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The fund manager can buy the security at Rs 400 from the spot market and sell it at Rs 410 in the futures market to make a profit of Rs 10
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Depending on the profit made through arbitrage opportunities, the value of the portfolio rises
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Risks are low since the price across the spot and futures market would differ even in a bearish market. Thus, fund managers can use this differential to make a gain
What is the tax implication of Arbitrage Funds?
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Arbitrage attract equity taxation on the capital gains earned since they primarily invest in equity arbitrage opportunities
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Returns up to Rs.1 lakh are tax-free if you stay invested for 12 or more months
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Returns exceeding Rs.1 lakh are taxed at 10%
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For redemption within 12 months, returns are taxed at 15%
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Dividends earned, if any, are taxed at your income tax slab rate
What are the payout options?
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Dividend option
Earn dividends on your investment at regular intervals
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Growth option
Accumulate the returns over the investment tenure and get a lump sum amount on redemption
Who should invest in Arbitrage Funds?
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New equity investors
You can benefit from the low volatility risk and enjoy stable returns
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Investors looking to invest in equity
If you want to invest in equity at a reduced risk, the Arbitrage Fund will be a good choice.
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Investors with a short-term investment horizon
If you want to invest for a short tenure, Arbitrage Funds can give better returns and tax efficiency than liquid funds
Portfolio Track
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Easily check credit score with Credit Track
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FAQs On Arbitrage Funds
Arbitrage Funds make a profit based on price differentials in different markets. It is suitable for investors having a low-risk appetite who want to make profits in the short term from the volatile markets without taking too much risk.
Arbitrage Funds are low to medium risk investment which provides lower but stable returns compared to equity funds. The returns on Arbitrage Funds are determined by the arbitrage opportunities available in the market and the ability of the fund manager to capitalize on these opportunities. Arbitrage Funds generally tend to outperform liquid funds and FDs on average.
The risk factors of Arbitrage Funds are high expense ratios and unpredictable payoffs. Though these funds carry lower risk than pure-equity funds, it is affected by market volatility which may affect the price difference between futures and cash market thereby impacting the returns on the funds.
Arbitrage Funds are also affected by interest rate risk and credit risk. They are risky in the short run and may incur exit load if redeemed within one month.
Arbitrage Funds invest most of the amount in equity and equity-related securities and do well when the market is volatile. These funds are not suitable for aggressive investors as these funds provide lower returns compared to other equity funds. When selecting an Arbitrage Funds to invest funds, choose the one with a large corpus size, experienced fund manager and low expense ratio. You should also consider your investment horizon with a time of six months to three years before selecting an Arbitrage Fund. These funds are not meant for a long-term investment horizon of over five years.
Exit loads vary among different funds. Exit load is typically applicable on Arbitrage Funds if you redeem your investments before a specified period, i.e. within 15-30 days.
Types of Hybrid Mutual Funds
Equity-Oriented Fund
Other asset class funds
Debt Funds
Invest in debt securities for low risks and stable returns.
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Equity Fund
Give your savings the growth they deserve. Invest in Equity Funds and unlock the potential of long-term growth
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ETF Funds
Invest in funds listed and traded on the stock exchange
Fund of Funds
Mutual funds that invest in other mutual funds both in India and globally
Index Fund
Passively-managed mutual funds tracking a particular index
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