Bandhan Arbitrage Fund - Direct Plan
An open ended scheme investing in arbitrage opportunities
What is an Arbitrage Fund?
Arbitrage funds operate by taking advantage of price differences between markets. Much like buying a rare item at a lower price and selling it elsewhere for a profit, these funds generate potential returns by buying low in one market and selling high in another. Additionally, arbitrage funds invest in short-term money market instruments and debt securities to maintain balance and diversification.
Arbitrage funds are equity-oriented hybrid funds that capitalize on market inefficiencies by simultaneously buying and selling assets in different markets. In arbitrage funds, the price difference between the cash and derivative markets allows investors to earn potential returns.
Arbitrage mutual funds buy and sell securities in different markets at the same time, which significantly lowers risk. Arbitrage funds are relatively less affected by market volatility, as they can generate potential returns as long as price fluctuations exist between markets.
As arbitrage funds are low risk, their returns tend to be relatively lower. However, in volatile markets, these returns may increase due to more arbitrage opportunities. In stable markets, fewer opportunities may lead to potentially lower returns.
What is the difference between arbitrage funds and liquid funds?
Although both arbitrage and liquid funds are low-risk, short-term investments, they differ significantly in their strategies.
Arbitrage Funds Meaning: Arbitrage funds are equity-oriented hybrid funds that invest in both equity markets and debt instruments.
Liquid Funds Meaning: Liquid funds are purely debt funds that invest in short-term market instruments.
Arbitrage Fund Risk: Arbitrage funds have lower risk due to market inefficiencies, but in stable markets, opportunities may decrease, potentially lowering returns.
Liquid Funds Risk: Liquid funds are exposed to interest rate risk, which can impact returns depending on changes in market rates.
Arbitrage Funds Returns: Arbitrage funds depend on market volatility for potentially higher returns. Volatile markets offer more opportunities, while stable markets may result in lower returns.
Liquid Funds Returns: Liquid funds typically offer relatively stable and consistent returns.
- Min Investment 100
- Min SIP Amount 100
- Exit Load0.25%• 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
Scheme is suitable for a minimum investment horizon of 6 months
Tier 1 Benchmark : Nifty 50 Arbitrage IndexAlternate Benchmark : CRISIL 1 Year T-Bill
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Performance as on 31st October 2024
| Scheme Names | CAGR Returns (%) | Current value of Investment of 10,000 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 1 year | 3 year | 5 year | 10 year | 21/12/2006 Since inception | 1 year | 3 year | 5 year | 10 year | 21/12/2006 Since inception | |
| Bandhan Arbitrage Fund - Regular Plan - Growth | 7.44 | 6.01 | 5.09 | 5.77 | 6.54 | 10,746 | 11,920 | 12,822 | 17,525 | 31,037 |
| 7.16 | 6.24 | 5.04 | 5.56 | N.A. | 10,718 | 11,998 | 12,791 | 17,192 | N.A. | |
| 7.54 | 5.97 | 5.52 | 6.39 | 6.23 | 10,756 | 11,902 | 13,087 | 18,593 | 29,443 | |
| ^ 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/46xQzi1
Bandhan Arbitrage Fund
(Scheme Risk-o-meter)
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 ideal for short to medium-term investors looking for low-risk returns. Since these funds buy and sell securities in different markets, they are less affected by market volatility, making them suitable for low-risk investors.
These funds are suitable for investors seeking arbitrage opportunities in equity markets with additional exposure to 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.