Best arbitrage mutual funds to invest in 2022: Kotak Equity Arbitrage Fund, Nippon India Arbitrage Fund

Top 5 arbitrage mutual funds of 2022

Returns of arbitrage funds

There are different types of mutual fund schemes, and arbitrage funds are among them. Arbitrage funds are a type of hybrid mutual fund scheme that looks for arbitrage opportunities in the equity market to make a gain. The fund invests in these opportunities and debt instruments to provide stable returns.

Arbitrage opportunities arise due to the difference in equity prices in the cash and futures markets. Fund managers look for these opportunities to cash in on the price difference between these two markets. By capitalizing on the price difference, fund managers generate returns for investors.

Related - Here's what you should know before investing in mutual funds

There are different types of arbitrage funds available in the market. Among them, the best arbitrage mutual funds are as follows –

1. Kotak Equity Arbitrage Fund

The Kotak Equity Arbitrage Fund was launched on 1st January 2013 and has delivered consistent returns over the years. Besides the arbitrage opportunities in the equity market, the fund invests in debt instruments and money market securities. You need a minimum investment of Rs.5000, and the expense ratio of the direct scheme is 0.44%.

2. Nippon India Arbitrage Fund  

Nippon India Arbitrage Fund invests primarily in equity arbitrage opportunities. 70.98% of the fund's allocation is towards equity, while 8.37% is in debt. The fund was launched in October 2010 and has an expense ratio of 1.05%. Nifty 50 serves as the fund's benchmark.

3. Invesco India Arbitrage Fund

Invesco India Arbitrage Fund is an equity-oriented hybrid scheme that invests 65.62% of its assets in equity. Formed in April 2007, the fund follows the Nifty 50 Arbitrage benchmark. A minimum lump sum investment of Rs.1000 is required to start investing in the scheme. If you choose the SIP route, the minimum monthly SIP should be Rs.500 for a minimum investment tenure of 12 months. You can choose lower investment tenures, too, but then the minimum SIP installment is higher.

4. Axis Arbitrage Fund

The Axis Arbitrage Fund invests in a mix of equity and debt in a ratio of 68.46% to 31.54%. Its AUM as on 31st August 2022 stood at Rs.4395.44 crores. The fund levies an exit load of 0.25% if you redeem your investment within the first seven days. The minimum required amount for a lump sum investment is Rs.5000; for a SIP, the minimum is Rs.1000.

5. Edelweiss Arbitrage Fund

Launched in January 2014, the Edelweiss Arbitrage Fund boasts an AUM of Rs.5841 crores. The minimum investment required is Rs.5000, and the expense ratio is 1.07%. An exit load of 0.1% if you redeem within the first 30 days.

Returns of the top 5 arbitrage funds of 2022

Here's how the best arbitrage mutual funds of 2022 have performed in terms of returns assuming the direct growth schemes of all funds 

Returns as on 29th September 2022

Returns in arbitrage funds

So, pick from these best arbitrage mutual fund schemes to maximize the return potential. Build up a profitable portfolio with low risk, stable returns, and the benefit of equity taxation too.

Also Read:Find out how mutual funds are taxed in India?

There are different types of mutual fund schemes, and arbitrage funds are among them. Arbitrage funds are a type of hybrid mutual fund scheme that looks for arbitrage opportunities in the equity market to make a gain. The fund invests in these opportunities and debt instruments to provide stable returns.

Arbitrage opportunities arise due to the difference in equity prices in the cash and futures markets. Fund managers look for these opportunities to cash in on the price difference between these two markets. By capitalizing on the price difference, fund managers generate returns for investors.

Related - Here's what you should know before investing in mutual funds

There are different types of arbitrage funds available in the market. Among them, the best arbitrage mutual funds are as follows –

1. Kotak Equity Arbitrage Fund

The Kotak Equity Arbitrage Fund was launched on 1st January 2013 and has delivered consistent returns over the years. Besides the arbitrage opportunities in the equity market, the fund invests in debt instruments and money market securities. You need a minimum investment of Rs.5000, and the expense ratio of the direct scheme is 0.44%.

2. Nippon India Arbitrage Fund  

Nippon India Arbitrage Fund invests primarily in equity arbitrage opportunities. 70.98% of the fund's allocation is towards equity, while 8.37% is in debt. The fund was launched in October 2010 and has an expense ratio of 1.05%. Nifty 50 serves as the fund's benchmark.

3. Invesco India Arbitrage Fund

Invesco India Arbitrage Fund is an equity-oriented hybrid scheme that invests 65.62% of its assets in equity. Formed in April 2007, the fund follows the Nifty 50 Arbitrage benchmark. A minimum lump sum investment of Rs.1000 is required to start investing in the scheme. If you choose the SIP route, the minimum monthly SIP should be Rs.500 for a minimum investment tenure of 12 months. You can choose lower investment tenures, too, but then the minimum SIP installment is higher.

4. Axis Arbitrage Fund

The Axis Arbitrage Fund invests in a mix of equity and debt in a ratio of 68.46% to 31.54%. Its AUM as on 31st August 2022 stood at Rs.4395.44 crores. The fund levies an exit load of 0.25% if you redeem your investment within the first seven days. The minimum required amount for a lump sum investment is Rs.5000; for a SIP, the minimum is Rs.1000.

5. Edelweiss Arbitrage Fund

Launched in January 2014, the Edelweiss Arbitrage Fund boasts an AUM of Rs.5841 crores. The minimum investment required is Rs.5000, and the expense ratio is 1.07%. An exit load of 0.1% if you redeem within the first 30 days.

Returns of the top 5 arbitrage funds of 2022

Here's how the best arbitrage mutual funds of 2022 have performed in terms of returns assuming the direct growth schemes of all funds 

Returns as on 29th September 2022

Returns in arbitrage funds

So, pick from these best arbitrage mutual fund schemes to maximize the return potential. Build up a profitable portfolio with low risk, stable returns, and the benefit of equity taxation too.

Also Read:Find out how mutual funds are taxed in India?

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