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PPFAS Mutual Fund has launched Parag Parikh Arbitrage Fund. The scheme aims to provide investors with an opportunity to generate capital appreciation 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.
Arbitrage is the simultaneous buying and selling of the same asset in different markets to profit from the price difference. In the Indian equity market, there is often a price difference between the cash market and the futures market.
The performance of the scheme will be benchmarked against the Nifty 50 Arbitrage Fund Total Return Index (TRI). Rajeev Thakkar, Raunak Onkar, Raj Mehta and Rukun Tarachandani will manage the scheme.
In a press release, Neil Parag Parikh, Chairman and CEO of PPFAS Mutual Fund said, “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 which arbitrage funds enjoy compared to non-equity-oriented funds.”
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."
