NFO Alert: PPFAS Mutual Fund launches Parag Parikh Arbitrage Fund; all you need to know

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arbitrage fund," said Neil Parag Parikh, Chairman and CEO, PPFAS Mutual Fund. “This fund will provide investors with a low-risk, tax-efficient way to generate returns from the arbitrage opportunity in the Indian equity market.

The Fund can be advantageous to investors in an income tax bracket which benefits from the relatively tax-advantaged status that arbitrage funds enjoy compared to non-equity-oriented funds," added Parikh. The scheme's investment objective is to generate capital appreciation and income by predominantly investing in arbitrage opportunities in the cash and derivatives segment of the equity market, and by investing the balance in debt and money market instruments.

Rajeev Thakkar, Chief Investment Officer, PPFAS Mutual Fund, said, “An arbitrage fund allows investors to use equity-oriented funds in a low-risk manner. Our traditional equity products require a long-term investment horizon.

An arbitrage fund can meet the needs of short to medium-term investors. A section of our investor base has been keen to have such a scheme and we are glad that this fills a gap in our product offerings." Investors can invest under the scheme with a minimum investment of ₹1000 per plan/option and in multiples of Re 1.

There is no upper limit for investment. Under normal circumstances, the asset allocation of the scheme will be as follows:Indicative allocations (% of total assets)MinimumMaximumEquities & Equity derivatives (Equity Hedged exposure)65100Low to MediumDebt securities & Money Market instruments including margin money deployed in derivatives transactions035Low to Medium To date, many asset management companies (AMCs) have launched such funds.Name of the fundTen-year returns (in %)Kotak Equity Arbitrage