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Bandhan Arbitrage Fund - Direct Plan

An open ended scheme investing in arbitrage opportunities

HybridInception Date:21/12/2006
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What is an Arbitrage Fund?

Arbitrage funds are equity-oriented hybrid funds that leverage arbitrage opportunities in the market. Arbitrage is the practice of buying and selling of an asset in two different markets to profit from inefficiencies present in different markets. In arbitrage funds, the fund manager sells and buys shares in different markets simultaneously. The price difference between the cash and derivative market allows the investors to gain returns. The fund manager also invests in short-term money market instruments and debt securities.

Arbitrage mutual funds simultaneously purchase and share securities. Consequently, the risk associated with these funds is significantly low. Arbitrage funds are relatively less vulnerable to market volatility and fluctuations; as long as the market keeps moving the fund can generate returns.

As a low risk fund, arbitrage funds returns are relatively lower, however this is dependent on market conditions. In volatile markets, arbitrage funds returns are likely to be higher. In calm markets, there may be fewer opportunities to trade, potentially lowering returns. What is the difference between arbitrage funds and liquid funds? While arbitrage and liquid funds are both low-risk-return funds and short-term investments, there is a significant difference between them.

Arbitrage Funds Meaning: Arbitrage funds are equity-oriented hybrid funds that invest in equity markets as well as debt and money market instruments.

Liquid Funds Meaning: Liquid funds are a debt fund and invest in short-term market instruments

Arbitrage Fund Risk: As arbitrage mutual funds purchase and sell in different markets, they are less vulnerable to volatility, and have lowered risk. However, in stable markets arbitrage opportunities run scarce. In such a scenario, these funds may be more risky and generate lower returns.

Liquid Funds Risk: Liquid funds are subject to interest rate risk.

Arbitrage Funds Returns: Arbitrage funds invest in equity instruments that may potentially offer higher returns. Arbitrage funds returns are dependent on the market. In a volatile market, there are more opportunities to make high returns. In stable markets, the opportunity to arbitrage is significantly lowered which may lead to below average or low returns.

Liquid Funds Returns: Liquid funds generate relatively stable and consistent returns.

  • Min Investment 100
  • Min SIP Amount 100
  • Exit Load
    0.25%
    • If redeemed/switched out on or before 15 days from the date of allotment - 0.25%
    • If redeemed/switched out after 15 days from the date of allotment - NIL
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Annualised Returns(as on 31st May, 2024)7.54%1yr5.50%3yr4.99%5yr
NAV 30.3010 as on 20/06/20241 Day Change: 0.00(0.00%)

Scheme is suitable for a minimum investment horizon of 6 months

Tier 1 Benchmark : Nifty 50 Arbitrage IndexAlternate Benchmark : CRISIL 1 Year T-Bill

Performance as on 31st May 2024

Scheme NamesCAGR Returns (%)Current value of Investment of 10,000
1 year3 year5 year10 year21/12/2006 Since inception1 year3 year5 year10 year21/12/2006 Since inception
Bandhan Arbitrage Fund - Regular Plan - Growth7.545.504.995.806.5310,75711,74512,75917,58330,145
8.175.805.055.63N.A.10,81911,84412,79717,299N.A.
7.085.355.536.426.1910,71011,69613,08918,63628,538
^ Tier 1 Benchmark   |   ^^ Alternate Benchmark   |   ^^^ Tier 2 Benchmark

This fund is managed by Mr. Nemish Sheth (w.e.f 01/11/2021) & Mr. Harshal Joshi (w.e.f 20/10/2016)

View fund performance of other funds managed by Mr. Nemish Sheth, Mr. Harshal Joshi

Past performance may or may not be sustained in future.
Regular and Direct Plans have different expense structure. Direct Plan shall have a lower expense ratio excluding distribution expenses, commission expenses etc.

Taxation:

For taxation, please refer the link :  https://bit.ly/3spfzbo

Bandhan Arbitrage Fund

(Scheme Risk-o-meter)

Investors understand that their principal will be at Low Risk.

Nifty 50 Arbitrage Index

(Tier 1 Benchmark Risk-o-meter)

This product is suitable for investors who are seeking* :

  • To generate low volatility returns over short to medium term.
  • Investments predominantly in arbitrage opportunities in the cash and derivative segments of the equity markets with balance exposure in debt and money market instruments.

Who Should Invest in Arbitrage Mutual Funds?

Arbitrage funds are a short to medium-term investment scheme. They are suitable for investors seeking short to medium-term returns. As arbitrage mutual funds buy and sell securities from different markets, they are relatively less vulnerable to market volatility and are categorised as a low-risk mutual fund. They are suitable for investors with a low-risk appetite.

Arbitrage funds are suitable for investors seeking investments predominantly in arbitrage opportunities in equity markets with balance exposure in debt and money market instruments.

FAQs on Arbitrage Funds

How do Arbitrage Funds work?

Arbitrage funds purchase and sell assets in two different markets and profit from the inefficiencies in prices across these markets.

Is it safe to invest in Arbitrage Funds?

Arbitrage funds are categorised as a low-risk mutual fund. As securities are purchased and sold simultaneously, the risk is significantly reduced.

What is Arbitrage Fund returns?

Arbitrage mutual funds take advantage of the inconsistency in prices of the cash and derivatives markets to generate returns. Arbitrage funds returns are dependent on the volatility of the market.

Are Arbitrage Funds the same as Hybrid Funds?

Arbitrage funds are a type of hybrid fund. They are an equity-oriented hybrid mutual fund that leverage arbitrage opportunities in the market.

How are Arbitrage Funds taxed in India?

Arbitrage funds are subject to capital gains tax. Returns made by staying invested up to a year are subject to short-term capital gains tax. Arbitrage funds returns gained after staying invested for over a year are subject to long-term capital gains tax.

What are the benefits of Arbitrage Funds?

Arbitrage mutual funds are a low-risk investment. They are suitable for investors with a low-risk appetite. They also benefit from equity taxation. Long term capital gains exceeding ₹1 lakh are taxed at 10%. Short term capital gains are taxed at 15%.

What are the disadvantages of Arbitrage Funds?

Arbitrage mutual funds can generate considerable returns in volatile markets. However, in stable markets they may not be as profitable.

*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.