Useful tips

Are arbitrage funds debt funds?

Are arbitrage funds debt funds?

Debt funds carry credit risk, which is eliminated in arbitrage funds. Arbitrage funds are treated as equity funds for taxation. Investors holding these schemes for less than a year pay 15% capital gains tax, while if they sell after a year, they pay only 10% long-term capital gains tax.

Is it good to invest in arbitrage funds?

These schemes also have tax advantages. Arbitrage funds are taxed like equity schemes. They qualify for long term capital gains tax of 10% if investments are held for more than a year. If investments are made for less than a year, a short term capital gains tax of 15% will be applicable.

Which is the best arbitrage fund?

Best Arbitrage Funds ranked by ET Money on performance consistency & downside protection

  • Axis Arbitrage Fund. Consistency.
  • Kotak Equity Arbitrage Fund.
  • Nippon India Arbitrage Fund.
  • UTI Arbitrage Fund.
  • Aditya Birla Sun Life Arbitrage Fund.
  • Edelweiss Arbitrage Fund.
  • Tata Arbitrage Fund.
  • Baroda BNP Paribas Arbitrage Fund.

Is there risk in arbitrage?

Risks in Arbitrage Trading. Risk arbitrage offers high-profit potential. However, the risk magnitude is also proportionate. Here are some risk scenarios, which could result from trade operations and other factors.

Is arbitrage fund better than fixed deposit?

An arbitrage fund offers high interest rates. But it is risky during volatile markets and there is no guarantee of returns. A fixed deposit provides investors with higher interest returns until the maturity date. However, you may have to pay a penalty for early withdrawals depending on the depositing entity.

Can arbitrage fund give negative return?

Arbitrage funds have an exit load of 1-6 months. Remember, widening of the spread differential can lead to arbit-rage funds delivering negative returns for very short periods.

Can arbitrage fund give negative returns?

Arbitrage funds have an exit load of 1-6 months. Remember, widening of the spread differential can lead to arbit-rage funds delivering negative returns for very short periods. Also, assess fixed-income portion of such funds in respect of underlying credit and duration risk.

Which is the safest debt fund?

Investors looking for debt schemes with the highest credit quality and relatively less affected by interest rate risk can consider Banking and PSU Debt funds. Nippon India Banking and PSU Debt fund (NBPDF) is one such scheme. It manages its portfolio with a lower maturity profile and has the highest quality papers.

How do you earn arbitrage profit?

Also known as merger arbitrage trading, risk arbitrage is an event-driven speculative trading strategy. It attempts to generate profits by taking a long position in the stock of a target company and optionally combining it with a short position in the stock of an acquiring company to create a hedge.

Which is better liquid fund or arbitrage fund?

Liquid funds are much safer in comparison to arbitrage funds, as it invests mainly in debt-related instruments. While arbitrage funds are riskier as the investment returns are dependent on the market volatility. The fund managers get ample arbitrage opportunities during a bullish market.

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