DSP BlackRock Mutual Fund has announced the launch of DSP BlackRock Arbitrage Fund, an open ended equity scheme investing in arbitrage opportunities.
The scheme aims to generate income through arbitrage opportunities between cash and derivative markets and arbitrage opportunities within the derivative market. The scheme is targeted at investors with low to medium risk appetite.
In a press release, the fund house has said, “The scheme also offers a better alternative to liquid funds as it offers a similar risk-adjusted return as liquid funds in a tax efficient equity classification.”
The scheme would benchmark against CRISIL Liquid Fund Index. On the asset allocation front, when arbitrage opportunities are available and accessible, the scheme will allocate a minimum of 65% and maximum of 100% towards equity & equity related instruments including equity derivatives including index futures, stock futures, stock options and index options and a maximum of 35% in debt and money market instruments. On the other hand, when adequate arbitrage opportunities are not available in the derivative and equity markets, asset allocation to all equity categories will be capped to a maximum of 65%, while debt and money market instruments will see allocation of minimum 35% to maximum of 100%.
The fund will be managed by Mayur Patel (Equity portion) and Rahul Vakeria (Debt portion) and will be open for subscription during its NFO period from 15 January to 22 January, 2018.
In a press release, Kalpen Parekh, President, DSP BlackRock Mutual Fund said, “Arbitrage funds offer low risk tax efficient returns to investors who have a short time horizon of 1 month to 1 year. It's a smart replacement for traditional debt investments. Arbitrage funds have been popular in last few years and investors have currently invested around Rs. 60000 crore in these funds. With the launch of DSP BlackRock Arbitrage fund, we wish to offer investors this tax efficient product and complement our present range of low risk funds.”