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Why it’s good to Invest in Arbitrage Funds and The Top Performing Arbitrage Schemes in The Market

Arbitrage FundsArbitrage funds are customized funds meant for risk adverse investors, and are safe for you to park your money when there is a constant wobble in the market. It makes use of the price differential in the derivatives and cash market for generating good returns.

Here are some of the most important reasons, presented in simple and concise manner as to why one should invest in an arbitrage fund-

  • A lot of people want to save in mutual funds, but are scared to do so due to their high risks. Arbitrage is the solution for them as they are safer to invest in than pure equities.
  • Since the returns one gets upon holding these funds for more than a year are tax free, there is growing investor interest in arbitrage funds.
  • Talking about returns, arbitrage funds can fetch somewhere around 6-9%.
  • If you exit the fund in the initial three to six months, you might be charged a nominal penalty, but beyond this time, exits are not penalized.
  • When the stock market is volatile, rich dividends can be reaped with an arbitrage investment.

Now, let’s have a look at the top ten performing arbitrage funds available in the market.

Top 10 Arbitrage Funds

Source: Swaraj Wealth Research

The first we have in the list is Reliance Arbitrage Advantage Fund- Growth Plan – Growth Option. The fund launched on 14-10-2010 has an asset of INR 6844.22 crores under management. In the first year of its launch, the scheme offered a return of 5.75%. In the third year, the plan gave a return of 6.92% and in the fifth year, the return offered was 7.70%. There is no data for the tenth year, and the total since-launch return the scheme offered is 8.09%, which is pretty impressive. In fact, this is the highest return any scheme has offered in the arbitrage category. So, Reliance is definitely a good choice if you want to invest in an arbitrage fund.

The second in order is ICICI Prudential Equity Arbitrage Fund – Growth. This happens to be the second best performing scheme in the arbitrage category. This scheme launched on 30-12-2006, having an asset of INR 10155.22 crores, offered a return of 5.64% in the first year of its launch. In the third year, the scheme offered a return of 6.73%.

While in the fifth year, the scheme marked a return of 7.78%, it went down to 7.44% in the tenth year. So, the overall return the scheme offered since launch is 7.73%.

The third best arbitrage scheme is Kotak Equity Arbitrage Fund- Growth. This fund launched on 29-09-2005 has an AUM of 10965.45 crores. In the first year of its advent, the scheme gave a return of 5.88%, and it was 6.78% in the third year.

While in the fifth year the return was 7.72%, it was 7.49% in the tenth year. Overall, the Kotak scheme offered 7.59% return since its launch.

The fourth in the list is UTI Spread Fund- Growth Option. Launched on 22-06-2006, this scheme has an AUM of INR 1758.00 crores. In the first year of the fund’s launch, it offered a return of 5.79%. In the third year, the return was 6.68%, and it was 7.14% in the fifth year. In the tenth year, UTI gave a return of 7.40%. The overall since-launch return offered by the scheme is 7.54%.

SBI Arbitrage Opportunities Fund, which comes next in order is a fund launched on 03-11-2006 with an AUM of INR 826.00 crores. In the first year, the scheme marked a return of 5.53%. It was 6.48% in the third year. In the fifth year, the return offered was 7.38%, while in the tenth year it dipped to 7.23%. The total return the scheme gave since launch is 7.47%.

The sixth top performing arbitrage fund is JM Arbitrage Advantage Fund- Growth, launched on 18-07-2006, that has an AUM of INR 2769.00 crores. The total since launch return the scheme offered is 7.46%.

The next slot in the list is clinched by HDFC Arbitrage Fund Wholesale Plan Growth Option, launched on 23-10-2007, having an AUM of INR 5470.02 crores. The scheme has overall offered a return of 7.32% since its advent.

The next is IDFC Arbitrage Fund- Regular Plan – Growth which marked a return of 7.24% since eits launch.

Invesco India Arbitrage Fund- Growth option which comes next has offered a since-launch return of 7.20%.

The last in the list is Edelweiss Arbitrage Fund- Regular Plan- growth Option which has offered a retun of 7.17% since launch.

These are the ten cherry picked arbitrage investment options we have for you. Invest in the one that suits your financial goals the best.