The fund aims to generate returns primarily by investing in arbitrage opportunities within the cash and derivatives segments of the equity markets, with the remaining funds allocated to debt and money market instruments.
Under normal circumstances, the fund will allocate between 65% and 100% of its assets to equities and equity-related instruments, including equity derivatives. It will allocate between 0% and 35% to debt securities and money market instruments, which include margin money used in derivative transactions.
In addition, 0-10% of the fund may be invested in shares issued by REITs and InvITs.
In defensive circumstances, the fund will allocate between 0% and 65% of its assets to equity and equity-related instruments, including equity derivatives. It will allocate between 35% and 100% to debt securities and money market instruments, which includes margin money used in derivative transactions. In addition, between 0% and 10% of the fund may be invested in units issued by REITs and InvITs.
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For each purchase/exchange of units, a 0.25% exit fee will be paid if units are redeemed/exchanged within seven days from the allocation date.
No exit fee will be payable if units are redeemed or exchanged after seven days from the allocation date.
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The scheme will be benchmarked against the Nifty 50 Arbitrage TRI and will be managed by Ramesh Mantri, Ashish Agrawal (equity investments) and Piyush Baranwal (debt investments).
The scheme is suitable for investors seeking short- and medium-term returns through investments primarily in arbitrage opportunities within the cash and derivatives segments of the stock market. It involves a “low” risk according to the scheme’s risk meter.
Investors in higher tax brackets may find the scheme attractive as it is classified as an equity-oriented fund for tax purposes. Long-term capital gains (LTCG) tax of 12.5 per cent is applicable on gains exceeding Rs 1,25,000 in a financial year, the fund manager’s statement said.
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