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Best Arbitrage Mutual Funds

Arbitrage funds are the ones that aim at buying and selling securities in varied markets. This lets investors profit from price differences in the markets.

Note the cash market is where transactions are settled on the spot. Future markets are where you can buy or sell assets at a predetermined price on future dates. But, with arbitrage funds, to see substantial gains, one has to execute a large amount of trades since the difference in value is small. 

You can see some of the best arbitrage funds in the market today given in the table below.

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List of Arbitrage Mutual Funds in India

Fund NameCategoryRisk1Y ReturnsRatingFund Size(in Cr)
Invesco India Arbitrage Fund
HybridLow8.7%5₹16,489
Tata Arbitrage Fund
HybridLow8.6%5₹11,519
Kotak Equity Arbitrage Fund
HybridLow8.8%4₹47,999
Edelweiss Arbitrage Fund
HybridLow8.7%4₹11,876
Axis Arbitrage Fund
HybridLow8.5%4₹5,237
Nippon India Arbitrage Fund
HybridLow8.6%4₹15,072
Aditya Birla Sun Life Arbitrage Fund
HybridLow8.6%4₹12,158
SBI Arbitrage Opportunities Fund
HybridLow8.5%3₹32,594
Mirae Asset Arbitrage Fund
HybridLow8.8%3₹2,114
Bandhan Arbitrage Fund
HybridLow8.6%3₹6,366
ICICI Prudential Equity Arbitrage Fund
HybridLow8.5%3₹22,162
UTI Arbitrage Fund
HybridLow8.6%3₹5,521
Baroda BNP Paribas Arbitrage Fund
HybridLow8.7%3₹1,179
DSP Arbitrage Fund
HybridLow8.4%3₹4,965
HSBC Arbitrage Fund
HybridLow8.5%3₹2,419
View All

Who Should Invest in Arbitrage Funds?

These funds can suit investors who are:

  1. Low-Risk Investors

Since the fund buys and sells securities at the same time, the transaction is practically free of the dangers associated with long-term investing. Arbitrage funds benefit from volatility. As a result, investors should not be concerned about volatility. Arbitrage opportunities will be accessible as long as the market moves in either direction, and arbitrage fund managers will be able to capitalize on them.

Factors to Consider While Investing in Arbitrage Mutual Funds

The factors that are to be considered before beginning to invest in arbitrage mutual funds are:

  1. Return Factor

These are excellent funds to earn reasonable returns for those who understand it well. Given that they are a blend of equities and debt funds in a volatile market, they only come with moderate returns. 

  1. Tenure of Investment

While finding the best performing arbitrage funds for investment, remember, since these funds carry exit loads, you should only consider them if you are prepared to stay invested for at least 3-6 months. 

  1. Financial Goals

Arbitrage funds are appropriate if you have short to medium-term financial goals. Instead of a traditional savings account, you can utilize these funds to park excess funds to develop an emergency fund and earn better returns.

Major Advantages

Here are some benefits of investing in the best arbitrage mutual funds

Minimal risk: Arbitrage funds can generate short-term returns by taking advantage of low-risk buy-and-sell opportunities that may arise. 

Higher returns than savings accounts: Arbitrage funds have the capacity to generate higher returns than a savings deposit account. They can also generate stable returns in volatile market conditions. 

Taxed as equity funds: Arbitrage funds are treated as equity funds for taxation purposes. It’s because these funds invest at least 65% of their assets in equity shares.

Choice of investment route: Investors can either choose the lump sum mode or systematic investment plan (SIP) option to allocate their funds to an arbitrage mutual fund. The former allows individuals to invest the entire amount in a fund all at once. By opting for the SIP route, one can invest in the best arbitrage mutual funds by paying fixed instalments at regular intervals. While the lump sum mode requires an individual to invest at least Rs.1,000, one needs Rs.500 to start investing via the SIP route.

Risks Involved While Investing in Arbitrage Funds

While finding the top arbitrage funds for your portfolio, ensure to go through these risks-

  1. Interest and Credit Risks

Arbitrage funds are hybrid funds that invest some of their assets in debt. These investments, however, are typically in term deposits or very short-term debt. As a result, while interest rate and credit risks exist, they are minor.

  1. Flat Market

When markets are trading flat, arbitrage chances are limited. In such a case, arbitrage funds may yield below-average returns, which is one of the most notable risks associated with arbitrage funds.

  1. High Expense Ratios

As effective arbitrage funds must execute a large number of trades, their expense ratios can be quite high. 

FAQs

Q1. What is the meaning of arbitrage funds?

Arbitrage funds involve the simultaneous purchases and sales of an asset in two distinctive markets to profit from the difference in prices. 

Q2. Why should I invest in arbitrage mutual funds?

There are several benefits that come from investing in arbitrage funds, and some of them are low risks, lower volatility, suitable for short-term investors, and tax efficiency.

Q3. Are arbitrage funds safe?

Arbitrage funds usually come with only a level of risk for the investor since each security is bought and sold at the same time, and there is not much risk involved in it. 

Q4. How are bank FDs and arbitrage funds different?

Arbitrage funds are a kind of equity-focused mutual fund that can assist conservative investors to benefit from volatile market situations. Investments in FDs earn a higher interest rate for the duration of the deposit until its maturity date. This makes them different investment vehicles with different outcomes. 

Q5. Are Arbitrage funds tax-free?

No, they are not tax-free. But these funds do have some tax exemptions on particular terms and conditions.

Let's have a closer look

Now let us jump and check about these top 15 mutual fund schemes.

Invesco India Arbitrage Fund Direct Growth

Fund Performance: The Invesco India Arbitrage Fund has given 6.83% annualized returns in the past three years and 6.14% in the last 5 years. The Invesco India Arbitrage Fund comes under the Hybrid category of Invesco Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Invesco India Arbitrage Fund via lump sum is ₹1,000 and via SIP is ₹500.

Min Investment Amt₹1,000
AUM₹16,489Cr
1Y Returns8.7%

Tata Arbitrage Fund Direct Growth

Fund Performance: The Tata Arbitrage Fund has given 6.51% annualized returns in the past three years and 6.17% in the last 5 years. The Tata Arbitrage Fund comes under the Hybrid category of Tata Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Tata Arbitrage Fund via lump sum is ₹5,000 and via SIP is ₹150.

Min Investment Amt₹5,000
AUM₹11,519Cr
1Y Returns8.6%

Kotak Equity Arbitrage Fund Direct Growth

Fund Performance: The Kotak Equity Arbitrage Fund has given 6.69% annualized returns in the past three years and 6.06% in the last 5 years. The Kotak Equity Arbitrage Fund comes under the Hybrid category of Kotak Mahindra Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Kotak Equity Arbitrage Fund via lump sum is ₹100 and via SIP is ₹100.

Min Investment Amt₹100
AUM₹47,999Cr
1Y Returns8.8%

Edelweiss Arbitrage Fund Direct Growth

Fund Performance: The Edelweiss Arbitrage Fund has given 6.65% annualized returns in the past three years and 6.13% in the last 5 years. The Edelweiss Arbitrage Fund comes under the Hybrid category of Edelweiss Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Edelweiss Arbitrage Fund via lump sum is ₹100 and via SIP is ₹100.

Min Investment Amt₹100
AUM₹11,876Cr
1Y Returns8.7%

Axis Arbitrage Fund Direct Growth

Fund Performance: The Axis Arbitrage Fund has given 6.57% annualized returns in the past three years and 5.94% in the last 5 years. The Axis Arbitrage Fund comes under the Hybrid category of Axis Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Axis Arbitrage Fund via lump sum is ₹500 and via SIP is ₹100.

Min Investment Amt₹500
AUM₹5,237Cr
1Y Returns8.5%

Nippon India Arbitrage Fund Direct Growth

Fund Performance: The Nippon India Arbitrage Fund has given 6.53% annualized returns in the past three years and 5.98% in the last 5 years. The Nippon India Arbitrage Fund comes under the Hybrid category of Nippon India Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Nippon India Arbitrage Fund via lump sum is ₹5,000 and via SIP is ₹100.

Min Investment Amt₹5,000
AUM₹15,072Cr
1Y Returns8.6%

Aditya Birla Sun Life Arbitrage Fund Direct Growth

Fund Performance: The Aditya Birla Sun Life Arbitrage Fund has given 6.45% annualized returns in the past three years and 5.91% in the last 5 years. The Aditya Birla Sun Life Arbitrage Fund comes under the Hybrid category of Aditya Birla Sun Life Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Aditya Birla Sun Life Arbitrage Fund via lump sum is ₹1,000 and via SIP is ₹100.

Min Investment Amt₹1,000
AUM₹12,158Cr
1Y Returns8.6%

SBI Arbitrage Opportunities Fund Direct Growth

Fund Performance: The SBI Arbitrage Opportunities Fund has given 6.64% annualized returns in the past three years and 5.75% in the last 5 years. The SBI Arbitrage Opportunities Fund comes under the Hybrid category of SBI Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in SBI Arbitrage Opportunities Fund via lump sum is ₹5,000 and via SIP is ₹500.

Min Investment Amt₹5,000
AUM₹32,594Cr
1Y Returns8.5%

Mirae Asset Arbitrage Fund Direct Growth

Fund Performance: The Mirae Asset Arbitrage Fund comes under the Hybrid category of Mirae Asset Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Mirae Asset Arbitrage Fund via lump sum is ₹5,000 and via SIP is ₹500.

Min Investment Amt₹5,000
AUM₹2,114Cr
1Y Returns8.8%

Bandhan Arbitrage Fund Direct Growth

Fund Performance: The Bandhan Arbitrage Fund has given 6.46% annualized returns in the past three years and 5.81% in the last 5 years. The Bandhan Arbitrage Fund comes under the Hybrid category of IDFC Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Bandhan Arbitrage Fund via lump sum is ₹100 and via SIP is ₹100.

Min Investment Amt₹100
AUM₹6,366Cr
1Y Returns8.6%

ICICI Prudential Equity Arbitrage Direct Growth

Fund Performance: The ICICI Prudential Equity Arbitrage Fund has given 6.41% annualized returns in the past three years and 5.83% in the last 5 years. The ICICI Prudential Equity Arbitrage Fund comes under the Hybrid category of ICICI Prudential Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in ICICI Prudential Equity Arbitrage Fund via lump sum is ₹5,000 and via SIP is ₹1,000.

Min Investment Amt₹5,000
AUM₹22,162Cr
1Y Returns8.5%

UTI Arbitrage Fund Direct Growth

Fund Performance: The UTI Arbitrage Fund has given 6.38% annualized returns in the past three years and 5.86% in the last 5 years. The UTI Arbitrage Fund comes under the Hybrid category of UTI Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in UTI Arbitrage Fund via lump sum is ₹5,000 and via SIP is ₹500.

Min Investment Amt₹5,000
AUM₹5,521Cr
1Y Returns8.6%

Baroda BNP Paribas Arbitrage Fund Direct Growth

Fund Performance: The Baroda BNP Paribas Arbitrage Fund has given 6.34% annualized returns in the past three years and 5.91% in the last 5 years. The Baroda BNP Paribas Arbitrage Fund comes under the Hybrid category of BNP Paribas Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Baroda BNP Paribas Arbitrage Fund via lump sum is ₹5,000 and via SIP is ₹500.

Min Investment Amt₹5,000
AUM₹1,179Cr
1Y Returns8.7%

DSP Arbitrage Fund Direct Growth

Fund Performance: The DSP Arbitrage Fund has given 6.33% annualized returns in the past three years and 5.74% in the last 5 years. The DSP Arbitrage Fund comes under the Hybrid category of DSP Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in DSP Arbitrage Fund via lump sum is ₹100 and via SIP is ₹100.

Min Investment Amt₹100
AUM₹4,965Cr
1Y Returns8.4%

HSBC Arbitrage Fund Direct Growth

Fund Performance: The HSBC Arbitrage Fund has given 6.29% annualized returns in the past three years and 5.9% in the last 5 years. The HSBC Arbitrage Fund comes under the Hybrid category of HSBC Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in HSBC Arbitrage Fund via lump sum is ₹5,000 and via SIP is ₹500.

Min Investment Amt₹5,000
AUM₹2,419Cr
1Y Returns8.5%

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