10 Best Performing Arbitrage Funds to Invest in 2020
If you cannot leverage the volatility of the equity market on your own, arbitrage funds can do it for you. Check out this post to know 10 of the top-performing arbitrage funds that you can consider for 2020.
Best Arbitrage Funds Investment- How to Get Started
Equity markets are volatile. This inherent volatility keeps most of the people away from the markets. But experienced investors know that this same volatility could also be leveraged and turned into an investment opportunity. An opportunity that is effectively hedged to keep the risks to a minimum.
Arbitrage mutual funds focus on leveraging market volatility. They take advantage of the pricing difference of a security between markets to generate profits. To do this individually, you’d need a good amount of knowledge and experience. With arbitrage funds, you get professionals to do this on your behalf.
10 Best Arbitrage Funds to Invest in India
If you are planning to invest in arbitrage funds in 2020, here are 10 of the best options you can consider-
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DSP Arbitrage Fund- Growth
# 1 on this list of top arbitrage funds is the DSP Arbitrage Fund (G). It was launched in 2018 and currently has its portfolio spread across equity (65.65%), debt (15.62), and others (18.73%), like TREPS (Tri-Party Repo) and bank FDs.
Current NAV (As on 26/02/2020) Current AUM Last 1-Year Last 3-Years Last 5-Years Since Inception 11.336 Rs. 1,178.74 crores 6.45% - - 6.19% -
TATA Arbitrage Fund- Growth
The TATA Arbitrage Fund (G) is also a new arbitrage scheme that was only launched in 2018. Unlike most funds on this list, this scheme has a significant exposure of around 15% to bank FDs. Other investments are in equity (67.78%), debt (8.7%), and others like TREPS.
Current NAV (As on 26/02/2020) Current AUM Last 1-Year Last 3-Years Last 5-Years Since Inception 10.757 Rs. 584.44 crores 6.26% - - 6.24% -
UTI Arbitrage Fund-Growth
The UTI Arbitrage Fund (G) is one of the oldest and most popular arbitrage schemes in India. It was launched in 2006 and currently has total assets worth more than Rs. 3,000 crores. The portfolio consists of equity (65.81%), debt (18.9%), and others (15.29%) like bank FDs.
Current NAV (As on 26/02/2020) Current AUM Last 1-Year Last 3-Years Last 5-Years Since Inception 26.259 Rs. 3,422.04 crores 6.15% 6.07% 6.31% 7.32% -
L&T Opportunities Arbitrage Fund- Growth
The L&T Opportunities Arbitrage Fund (G) has been able to consistently beat the category average over the years. It was launched in 2014 and currently has assets worth more than Rs. 800 crores in the portfolio.
Almost 15% of its portfolio is invested in bank FDs. Equity investment currently stands at 66.7%, while debt exposure is around 9%.
Current NAV (As on 26/02/2020) Current AUM Last 1-Year Last 3-Years Last 5-Years Since Inception 14.310 Rs. 817.63 crores 6.09% 6.06% 6.32% 6.53%/td> -
IDFC Arbitrage Fund- Growth
Next on this list of best arbitrage mutual funds is the very popular IDFC Arbitrage Fund. It was launched in 2006 and currently has one of the largest AUMs in this category. The scheme's portfolio comprises of equity (66.69%), debt (9.39%), and others (23.92%) like bank FDs.
Current NAV (As on 26/02/2020) Current AUM Last 1-Year Last 3-Years Last 5-Years Since Inception 24.575 Rs. 12,224.38 crores 6.13% 6.04% 6.25% 6.05% -
Edelweiss Arbitrage Fund- Growth
The Edelweiss Arbitrage Fund (G) was launched in 2014 and has been a popular choice since then. The scheme currently has an AUM of more than Rs. 4,000 crores spread across equity (60.93%), debt (7.1%), others (31.9%) like net receivables and bank FDs.
Current NAV (As on 26/02/2020) Current AUM Last 1-Year Last 3-Years Last 5-Years Since Inception 14.484 Rs. 4,026.13 crores 6.14% 6.07% 6.44% 6.75% -
Nippon India Arbitrage Fund- Growth
With annualized returns as high as 7.67% since inception, Nippon India Arbitrage Fund (G) can be a great choice if you are looking for a top arbitrage scheme. Its equity investment of 66.35% is spread across more than 100 stocks from all the different sectors.
Debt exposure currently is at 15.13%, and other investments make up of around 18.5% of the AUM.
Current NAV (As on 26/02/2020) Current AUM Last 1-Year Last 3-Years Last 5-Years Since Inception 19.997 Rs. 10,496.56 crores 6.14% 6.23% 6.49% 7.67% -
Kotak Equity Arbitrage Fund- Growth
The Kotak Equity Arbitrage Fund (G) has the highest AUM as compared to other schemes on this list. It is also one of the few schemes whose expense ratio is below the category average of 1.03%.
The equity exposure of the scheme is around 62%, debt investment of about 9.80%, and other investments like bank FDs and mutual fund units of around 27.5% of the portfolio.
Current NAV (As on 26/02/2020) Current AUM Last 1-Year Last 3-Years Last 5-Years Since Inception 27.854 Rs. 17,856.02 crores 6.10% 6.15% 6.38% 7.36% -
ICICI Prudential Equity-Arbitrage Fund- Growth
ICICI Prudential is one of the most reputed AMCs in the country. The Equity Arbitrage Fund (G) offered by the fund house currently has a high AUM of more than Rs. 13,500 crores.
The portfolio is spread across equity (60.98%), debt (12.2%), and others (26.81%). At 0.93%, it also has one of the lowest expense ratios in the category.
Current NAV (As on 26/02/2020) Current AUM Last 1-Year Last 3-Years Last 5-Years Since Inception 25.732 Rs. 13,738.97 crores 5.97% 5.95% 6.30% 7.44% -
HDFC Arbitrage Fund- Retail-Growth
Last on this list of best arbitrage funds is the HDFC Arbitrage Fund- Retail (G). The scheme has an expense ratio of only 0.75%, which is lower than all the schemes listed above. But the returns have been below the category average in the last few years.
Nevertheless, it is still an excellent scheme with a portfolio made up of equity (65.54%), debt (17.44%), and others (17.02%).
Current NAV (As on 26/02/2020) Current AUM Last 1-Year Last 3-Years Last 5-Years Since Inception 22.640 Rs. 6,698.54 crores 5.97% 5.59% 6.04% 6.84%
Selecting the Best Arbitrage Funds for Your Investment
To pick the best arbitrage fund, focus on consistency in returns offered by the scheme. Top schemes offered by reputed fund houses, like the ones listed above, are highly recommended. Do also check the expense ratio of the schemes to pick the best.
Also, while arbitrage funds are known to carry minimum risk, do remember that no mutual fund investment is risk-free, especially in shorter investment horizons. So, do understand the pros and cons of arbitrage mutual funds before making the investment decision.