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Systematic Transfer Advantages

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Advantages Mutual Fund Systematic Transfer Option

Systematic transfer from an arbitrage fund to another mutual fund is a good idea. Find out how

It is a good idea to systematically transfer investments from an arbitrage fund into another fund. Their asset allocation makes them an ideal investment vehicle for those who would want the best of both worlds- safety like debt and tax-break of equity.

Arbitrage funds buy and sell an equity instrument simultaneously and profit from the difference in price. These funds take advantage of the mispricing between the cash and the derivatives market.

 

While they are classified as equity funds, giving investors the tax benefit of equity, arbitrage funds do have an exposure to debt. Their equity holdings are also hedged. Hence, the volatility associated with equity is missing. These funds go long in the cash market and short in the futures market. In this way, the fund manager hedges the risk. Hence, regardless of the market movement, the returns from arbitrage should always be in the green.

 

However, these funds can have a higher expense ratio because they resort to heavy trading. You can not expect mind boggling returns from such funds. But that is not its USP. Its appeal lies in the risk-free nature of its returns. Equity is the most efficient asset class for taxation benefits as dividend income and long-term capital gains, both are tax-free. From an investment point of view, equities are volatile in nature and the risk of capital erosion also exists. But arbitrage funds circumvent this problem.

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Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax Plan Invest Online
  2. HDFC TaxSaver Invest Online
  3. DSP BlackRock Tax Saver Fund Invest Online
  4. Reliance Tax Saver (ELSS) Fund Invest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) Fund Invest Online
  7. SBI Magnum Tax Gain Scheme 1993 Invest Online
  8. Sundaram Tax Saver Invest Online
  9. Edelweiss ELSS Invest Online

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Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
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      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
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    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFunds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

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