Bajaj Finserv Mutual Fund announced the launch of the Bajaj Finserv Arbitrage Fund, an open-ended scheme investing in arbitrage opportunities.
The scheme opened for public subscription on September 08, 2023, and will close on September 13, 2023. The scheme re-opens for continuous sale and repurchase within five days from the date of allotment.
What kind of mutual fund scheme is this?
This is an open-ended scheme investing in arbitrage opportunities.
This product is suitable for investors who are seeking
- Short-term income generation
- Income through arbitrage opportunities in the cash and derivatives segments of the equity markets.
What is the main objective of investing in this fund?
The investment objective of the scheme is to seek to generate returns by investing in arbitrage opportunities in the cash and derivatives segments of the equity markets and by investing balance in debt and money market instruments. However, there is no assurance that the investment objective of the scheme will be achieved.
How may one invest in this scheme?
Investors can invest under the scheme with a minimum investment of ₹500 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:
| Instruments | Indicative allocations (% of total assets) | Risk Profile | |
Minimum | Maximum | ||
Equity and Equity related instruments including derivatives and stock options | 65 | 100 | Very High Risk |
Debt & Money Market instruments including the margin money deployed in derivative transactions (Including units of liquid schemes of Bajaj Finserv Mutual Fund) | 0 | 35 | Low to Moderate Risk |
Non-convertible preference shares | 0 | 10 | Very High Risk |
Are there similar mutual funds in the market?
To date, many asset management companies (AMCs) have launched such arbitrage funds, thus, allowing inclined investors to avail of returns corresponding to the total returns of the securities in this particular index. These include:
Name of the fund | Ten-year returns (in %) |
Kotak Equity Arbitrage Fund | 6.83% |
Nippon India Arbitrage Fund | 6.74% |
ICICI Prudential Equity - Arbitrage Fund | 6.69% |
Invesco India Arbitrage Fund | 6.69% |
Bandhan Arbitrage Fund | 6.66% |
Aditya Birla Sun Life Arbitrage Fund | 6.58% |
UTI Arbitrage Fund | 6.56% |
SBI Arbitrage Opportunities Fund | 6.54% |
HDFC Arbitrage Fund | 6.35% |
| Source: MoneyControl | |
How will the scheme benchmark its performance?
The scheme benchmark would be the Nifty 50 Arbitrage Index (TRI).
The composition of the aforesaid benchmark is such that, it is most suited for comparing the performance of the scheme. The Trustees may change the benchmark in the future if a benchmark better suited to the investment objective of the scheme is available.
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:
0.25% of applicable NAV if redeemed/switched out within 15 days from the date of allotment. Nil if redeemed/switched out after 15 days from the date of allotment.
Who will manage this scheme?
Nimesh Chandan would be looking into the equity aspects of the scheme. Siddharth Chaudhary would be responsible for the debt component 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 and is best suited to investors willing to understand that their principal will be subject to low risk only. However, investors should consult their financial advisors if they doubt whether the product is suitable for them.
