Over the three months ended February 29, 2024, this category received net inflows of 32,761.7 crore.
"With interest rates getting reset upwards, arbitrage yields have moved higher. This increase was supported by continuing flows into equity markets and greater participation, which led to increased opportunities for arbitrage funds. A combination of reasonable returns, relatively low-risk profile, and tax efficiency made these funds attractive to investors," says Sirshendu Basu, head, products, Bandhan Asset Management Company (AMC).
How they work
Arbitrage fund managers try to take advantage of the price differential between the cash and the futures segment. They do not take any directional risk in the equity market.
"An arbitrage fund is an equityoriented hybrid fund which generates returns from the price differential between the equity and the derivative market of the same underlying stock. Since the position is completely hedged, the fund does not take any price risk," says Sailesh Jain, fund manager, Tata Mutual Fund.
This story is from the March 09, 2024 edition of Business Standard.
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This story is from the March 09, 2024 edition of Business Standard.
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