NFO Review: Should you invest in the newly launched Parag Parikh Arbitrage Fund? 7 experts answer

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Ladder7 Financial Advisories said, “Arbitrage fund is a low-risk fund that can possibly give four to five per cent returns every year. This will be a good place to park for any short-term needs as this is treated as an equity fund for taxation purposes. The STCG tax is hence only 15 per cent till the completion of 12 months and 10 per cent after that after the initial LTCG amount of ₹1 lakh." Hiren Thakkar, Chartered Accountant Proprietor, Hiren S Thakkar & Associates explains how this is the perfect time to invest in arbitrage funds due to uncertainty and high valuations.

Thakkar explained, “You don’t want to put excess savings in equities because of the high valuation. When you are not aware of the nitty gritty of debt funds and want to park for a short term, say less than a year or so, or wish to avail of the tax benefits, arbitrage funds may be a great choice to put your money in." While explaining who should invest in arbitrage funds, Viral Bhatt, Founder, Money Mantra explained, “You should consider investing in an arbitrage fund if and when you are looking for a low-risk investment option. Arbitrage funds are considered to be relatively low-risk because they exploit price inefficiencies between different markets.

You want to earn moderate returns. Arbitrage funds typically offer returns that are higher than liquid funds, but lower than equity funds. You are investing for a short to medium-term horizon.