Arbitrage Mutual Funds

Arbitrage Mutual Funds

Arbitrage Mutual Funds are the hybrid fund which is equity-oriented, it is the scheme in which offers grip over the markets. These schemes have pricing variations, the fund manager purchases the stocks at this variational pricing over two exchanges and earns profits over the selling price and buying price, respectively. Unlike the other funds where the fund manager sells the funds when the market is offering better pricing, but in this scheme the fund manager sells the funds only when there is scope of earning definite returns. And when it comes to inquire about risks, risk factor is like that of the debt funds. But the arbitrage fund is best way of investment who wishes to invest in equity fund or equity related instruments but do not want any risks, for that kind of people these hybrid funds are better opportunity to park their money to earn higher returns than the other debt funds.

List of India's Top Arbitrage Funds:

  • Mahindra Dhan Sanchay Yojana provides approximately 8.15% of returns.
  • Nippon India Arbitrage Fund offers 6.29% for 3 years.
  • Edelweiss Arbitrage Fund offers 6.22% returns for 3 years.
  • BNP Paribas Arbitrage Fund offers 6.22% returns for 3 years.
  • L&T Arbitrage Opportunities Fund gives about 6.08% returns for 3 years tenure.

Factors effecting the Arbitrage Mutual Funds:


In these schemes there is no guarantee of returns, though there is no equity exposure risk, the returns are low but if an investor holds for a period of 5 to 8 years then an investor could expect for 8% returns.

Expense Ratio:

It is the charge applicable by the fund house, the investor must select with low expense ratio to gain higher returns.


Tax is applicable based on tenure, about 15% Short term capital gain tax applicable. And 10% of tax applied without indexation.

Bottom Line:

Investors looking for higher returns with lower risk averse, with a flexible tenure unlike the other mutual debt funds, these mutual funds do not have the exposure to equity.