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

The scheme opened for public subscription on October 23, 2023, and will close on October 27, 2023. The scheme re-opens for continuous sale and repurchase on November 03, 2023.

What kind of mutual fund scheme is this?

This is an open-ended scheme investing in arbitrage opportunities. This product is suitable for investors looking to

• Generate income by investing in arbitrage opportunities
• Invest in arbitrage opportunities in the cash and derivatives segment of the equity market.

“We are excited to launch our new 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.

What is the main objective of investing in this fund?

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.”

How may one invest in this scheme?

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:

Are there similar mutual funds in the market?

To date, many asset management companies (AMCs) have launched such funds.

How will the scheme benchmark its performance?

The performance of the scheme will be benchmarked against NIFTY 50 Arbitrage TRI (Total Returns Index).

The composition of the aforesaid benchmark is such that, it is most suited for comparing the performance of the scheme. 

Are there any entry or exit loads to this scheme?

This scheme involves no “Entry Load”, which means that investors do not have to pay anything to park their earnings in this scheme.

The “Exit Load” would be charged as under.

– In respect to each purchase/switch-in of units, an Exit Load of 0.25% is payable if units are redeemed/switched out within 30 days from the date of allotment.

– No Exit Load is payable if units are redeemed/switched out after 30 days from the date of allotment.

Who will manage this scheme?

Rajeev Thakkar, Raunak Onkar, Raj Mehta and Rukun Tarachandani will be looking into the equity aspects of the scheme.

Does the fund contain any inherent risk?

The scheme involves “Low Risk” as per the details mentioned in the Scheme Information Document. However, investors should consult their financial advisors if they doubt whether the product is suitable for them.

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Updated: 23 Oct 2023, 05:30 PM IST