What is arbitrage fund returns?

Arbitrage funds are hybrid mutual funds that generate returns by using the strategy of simultaneously buying and selling of securities in different markets to take advantage of different prices.

Is arbitrage fund a good investment?

Arbitrage funds can be a good choice for investors who want to profit from a volatile market without taking on too much risk. Although arbitrage funds are relatively low risk, the payoff can be unpredictable. Arbitrage funds are taxed like equity funds.

Can arbitrage funds give negative returns?

Arbitrage funds have an exit load of 1-6 months. Remember, widening of the spread differential can lead to arbit-rage funds delivering negative returns for very short periods. Also, assess fixed-income portion of such funds in respect of underlying credit and duration risk.

Is arbitrage fund better than FD?

An arbitrage fund offers high interest rates. But it is risky during volatile markets and there is no guarantee of returns. A fixed deposit provides investors with higher interest returns until the maturity date. However, you may have to pay a penalty for early withdrawals depending on the depositing entity.

Is arbitrage fund tax free?

Arbitrage funds are treated as equity funds for taxation. Investors holding these schemes for less than a year pay 15% capital gains tax, while if they sell after a year, they pay only 10% long-term capital gains tax.

What is the benefit of arbitrage?

Arbitrageurs take advantage of the fact that markets are not always completely efficient, and price discrepancies across markets for the same asset open-up arbitrage opportunities. Arbitrage trading can be done across any asset class as long as there exists a potential to exploit price differentials across markets.

How is Tata arbitrage fund?

Arbitrage Fund : The fund has 66.08% investment in domestic equities of which 47.24% is in Large Cap stocks, 13.24% is in Mid Cap stocks, 2.2% in Small Cap stocks. The fund has 14.39% investment in Debt, of which 9.23% in Government securities, 5.16% is in Low Risk securities.

Why do arbitrage funds have low returns?

For instance, we have witnessed low returns from arbitrage funds recently. This is due to the deep correction we witnessed in March, which caused many stocks to trade at a discount than at a premium to their price. This diluted the returns of these funds. The arbitrage spread turned 10-20 bps negative in March.

Is arbitrage legal in India?

And to answer the question – is arbitrage trading legal in India? Yes, it is, if you are taking stock delivery. Arbitraging is encouraged in many markets since it brings out price discrepancies and helps the market to implement the law of one price.

Who should invest in arbitrage funds?

Investors who want higher returns (compared to savings bank) on their short term funds. Investors who want very low risk for their investment. Investors in higher tax brackets who want to take advantage of equity taxation. Investors who have investment tenures of at least 3 month or longer.

How does investor profit from arbitrage?

Arbitrage is an investment strategy in which an investor simultaneously buys and sells an asset in different markets to take advantage of a price difference and generate a profit. While price differences are typically small and short-lived, the returns can be impressive when multiplied by a large volume.

What is HDFC arbitrage Fund?

The Fund invests a minimum of 65% into fully hedged equity positions. The Scheme will seek to generate income through arbitrage opportunities such as Index/Stock Spot vs Index/Stock Futures or Index Futures vs Stock Futures or Future of same stock with different expiry months, etc.

What is Mirae Asset arbitrage fund?

41012 327-41012 Mirae Asset Mutual Fund The scheme seeks to generate capital appreciation and income by predominantly investing in arbitrage opportunities in the cash and derivative segments of the equity markets and the arbitrage opportunities available within the derivative segment and by investing the balance in …

Are arbitrage funds taxable?

How do you calculate arbitrage profit?

To calculate the arbitrage percentage, you can use the following formula:

1. Arbitrage % = ((1 / decimal odds for outcome A) x 100) + ((1 / decimal odds for outcome B) x 100)
2. Profit = (Investment / Arbitrage %) – Investment.
3. Individual bets = (Investment x Individual Arbitrage %) / Total Arbitrage %

Are arbitrage funds safe?

Arbitrage funds are considered even safer than many debt products. Debt funds carry credit risk, which is eliminated in arbitrage funds. Arbitrage funds are treated as equity funds for taxation.

Are arbitrage funds tax free?