The new fund offer opens for subscription on June 12, 2014 and closes on June 20, 2014.
Edelweiss Mutual Fund has launched an open ended equity fund called Edelweiss Arbitrage Fund.
The scheme seeks to generate income by investing in arbitrage opportunities in the cash and the derivative segments of the equity markets. The fund will also seek arbitrage opportunities in the derivative segment and the balance would be invested in debt and money market instruments.
Speaking on the rationale of launching the scheme, Vikaas Sachdeva, CEO, Edelweiss Asset Management. said, “Edelweiss is known for its expertise in the field of arbitrage. Hence it was only logical and timely for us, to launch this fund at a time with immense positivity in sentiment. For investors with a medium to long term investment horizon, this fund offers an immense potential, even for the very risk averse investors Arbitrage opportunities exist in all market conditions, helping investors generate relatively lower risk returns whichever way the index moves. With its equity orientation, the dividends are tax free and the capital gains , if the units are held for more than one year, are tax free too, making it more tax efficient than liquid and debt schemes.”
With an active investment strategy, Edelweiss Arbitrage Fund will predominantly invest in arbitrage opportunities between spot and futures prices of exchange traded equities. The scheme would also look to avail of opportunities between one futures contract & another and also build market neutral positions that offer an arbitrage potential. The scheme will have a concentrated portfolio and the margin money required for the purposes of derivative exposure will be held in the form of term deposits.
The scheme will charge an exit load of 0.50% if units are redeemed or switched before three months from the date of allotment. Benchmarked against CRISIL Liquid Fund Index, the fund will be managed by Bhavesh Jain and Paul Parampreet.
Currently, there are 11 arbitrage funds in the industry which manage roughly Rs. 4,816 crore. According to Value Research, these funds have delivered an average of 9% absolute return over a one year period.
The new fund offer opens for subscription on June 12 and closes on June 20 and the minimum application amount is Rs. 5,000.
As on May 2014, Edelweiss manages Rs. 204 crore.
