Best arbitrage mutual funds to invest in March 2025
arbitrage mutual funds.
Arbitrage funds look for arbitrage opportunities available between the cash and derivatives markets. In other words, the fund managers in these schemes look for the price difference that they can exploit between the cash and derivatives markets. They may also invest in debt securities and equities if there are no arbitrage opportunities available in the market.
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Best MF to invest
Looking for the best mutual funds to invest? Here are our recommendations.
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Arbitrage funds are taxed like equity mutual funds. This means they qualify for long term capital gains tax of 12.5% if investments are held for more than a year. If investments are for less than a year, short term capital gains tax of 20% will be applicable.
Volatility in the stock market may help arbitrage funds as it will offer better arbitrage opportunities. Also, returns from arbitrage funds have nothing to do with the interest rate regime as they invest in arbitrage opportunities. So they may be suitable for investors who don’t want to take a call on interest rates.
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Arbitrage opportunities
However, you should keep in mind that there may be periods when there are not many arbitrage opportunities available in the market. This can happen when the market is headed in a single direction. A volatile market is helpful to arbitrage funds as there will be more arbitrage opportunities available.
Here are our recommended arbitrage schemes you can
