Skip to main content

Arbitrage Mutual Funds

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 
With volatility in the stock markets rising higher, one class of mutual funds — arbitrage funds — is doing really well. In the past one year, the National Stock Exchange’s (NSE) volatility index (VIX) is up 28 per cent. Arbitrage funds have returned slightly over nine per cent in the same period.

In comparison, the BSE Sensex returned around eight per cent and Nifty 5.50 per cent.

Arbitrage funds look for opportunity when there is a difference in prices of an asset between two or more markets.

For example, there could be a difference between a stock’s price on BSE versus NSE, or a difference in prices of an asset in the spot (cash) market and the futures ( derivatives) market, or a difference between this month’s future contract and the next month’s future contract. If the difference is big, thanks to rising volatility, arbitrage funds can make better returns.

Between December 7, 2012 and till date, the Sensex has moved in the range of 19,424.10 and 21,326.42; Nifty has moved between 5,907.40 and 6,415. While the markets remained volatile for most part of the past year, in the past couple of months they have done well. The Sensex gained 19 per cent from its yearlow of 17905.91 on August 21. But volatility is on the rise, and going forward, experts say volatility could remain at elevated levels due to big events such as the US taper and central government elections. Further, interest rates have also been rising, and that is giving rise to more arbitrage opportunities. Also, mid- cap space is also seeing an increase in volatility, as market participation has been increasing in these counters.

Arbitrage funds do well when interest rates go up. And, at present we are in the high interest rate regime.

Mid- caps form a significant chunk of an arbitrage fund’s portfolio these days. For example, nearly 26 per cent of SBI Arbitrage Opportunities’ top equity holding, which forms a little over 50 per cent of the scheme’s portfolio, is in mid- cap stocks. Birla Sun Life Enhanced Arbitrage holds 24 per cent of its top holding in mid- cap stocks.

When markets rise, arbitrage opportunities increase. And in the past one- two months even mid- caps have performed.

There could be good arbitrage opportunities among emerging large- caps but not in mid- caps. Fund managers could be finding value in the former.

Industry experts said arbitrage funds are good products to invest with a horizon of six months to a year. But, do not get influenced by the portfolio holding of these schemes. Because it might change over the next few months. Today, mid- caps are being favoured for gains. But the strategy might or might not be the same over the next three to six months. Therefore, while you could make decent gains from this fund category till the Lok Sabha elections, don’t make decisions based on the portfolio. But since the markets are riding on four crucial elections results over the weekend, mid- caps would also be doing well.

The other advantage of investing in arbitrage funds is that these are more tax- friendly than other equity funds. Many of these funds pay dividends, which are tax- free in the hands of the investor. If you stay invested for a year, your money will be tax exempt. Even if you stay invested for six months, there will be no exit load, as most of these funds levy exit load only up to three months and short- term capital gains will be only 15 per cent. This is better than ultra short- term debt funds, where dividends are taxable and short- term capital gains are taxable at slab rate.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

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

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      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
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    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

Popular posts from this blog

Guide to pension plans in the form of Insurance

  Pension plans ensure that you are financially secure during your golden years. Take a look at the important aspects that you must keep in mind while opting for one...      Gone are the days when a leading criterion for choosing an employer was the type of pension plan that came with your salary package. Today, more important issues like matching of skill sets to job requirements, scope for personal and financial growth, etc. have come to the forefront. However, this has left individuals with the responsibility of financially planning for their golden years. And it's all for the best as there are a variety of pension plans available in the market to suit different individuals and their specific needs. WHAT ARE PENSION PLANS?     In a pension plan, you are required to pay premiums for a certain number of years and once you reach the retirement age, the insurer returns a lump sum amount that can be then used to purchase an annuity or stream of income for the rest of your life....
Read more

All about "Derivatives"

What are derivatives? Derivatives are financial instruments, which as the name suggests, derive their value from another asset — called the underlying. What are the typical underlying assets? Any asset, whose price is dynamic, probably has a derivative contract today. The most popular ones being stocks, indices, precious metals, commodities, agro products, currencies, etc. Why were they invented? In an increasingly dynamic world, prices of virtually all assets keep changing, thereby exposing participants to price risks. Hence, derivatives were invented to negate these price fluctuations. For example, a wheat farmer expects to sell his crop at the current price of Rs 10/kg and make profits of Rs 2/kg. But, by the time his crop is ready, the price of wheat may have gone down to Rs 5/kg, making him sell his crop at a loss of Rs 3/kg. In order to avoid this, he may enter into a forward contract, agreeing to sell wheat at Rs 10/ kg, right at the outset. So, even if the price of wheat falls ...
Read more

More on Mutual Funds

What Is a Mutual Fund ? A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. Anybody with an investable surplus of as little as a few thousand rupees can invest in Mutual Funds. These investors buy units of a particular Mutual Fund scheme that has a defined investment objective and strategy The money thus collected is then invested by the fund manager in different types of securities. These could range from shares to debentures to money market instruments, depending upon the scheme's stated objectives. The income earned through these investments and the capital appreciation realized by the scheme are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.   What Are The Types of Mutual Fund Scheme...
Read more

PF e-Passbook

  Provident Fund e-Passbook   The Employees Provident Fund Organisation now runs an e-passbook service that enables members to log in and access their provident fund accounts . This facility enables tracking of the money and ensuring that the employer's contribution has been deposited into the account. This facility is available to those whose accounts are with the central provident fund commissioner for maintenance and can be availed at members.epfoservices.in . Registration A member can register at the portal easily by using PAN , Aadhar or passport number as the log in and the mobile numbers as the PIN . This combination enables easy retrieval of information. Accounts After logging in, the member has to choose the state where the employer is located, and enter the code number of the employer, account number and name. These details can be obtained from any existing PF document . PIN To download the passbook, the member will request...
Read more

Refinancing Home Loans

With home loan lending rates easing out, many borrowers are considering home refinance as an option to minimise their liability    Home loan borrowers have always been concerned about their financial outflow while repaying debts. With interest rates easing out in the recent past, many borrowers are considering home refinance as an option to reduce this burden. So what is home refinance and how can you capitalise from it? Understanding refinancing.     Refinancing in simple terms means replacing your existing loan, with a new one, under fresh terms and conditions. So when you talk of home loan refinance, you will be repaying your existing home loan before its final tenure, with a new loan possessing different terms.    A home refinance option could prove to be beneficial for many borrowers. However, it is important to understand its procedure and the various costs that are associated with it before considering the option.    Whether it's for personal requirements or chang...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now