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Tata Mutual Fund has launched the Tata Income Plus Arbitrage Active Fund of Fund. This FoF will allocate 65% its total corpus to Tata Corporate Bond Fund and 35% to Tata Arbitrage Fund.
Income Plus Arbitrage FoF is a new fund category and is similar to debt funds but with additional tax benefits compared to pure debt funds. Under this, any gains arising from FoFs will be considered long-term after 24 months. Such long-term capital gains will be taxed in line with equity taxation, i.e., at 12.5% on gains.
"In the current environment where debt yields are attractive and volatility in equity market persists, a hybrid strategy like this can potentially offer superior post-tax returns compared to traditional debt funds," said Sailesh Jain, Fund Manager, Tata MF. "The fund’s active allocation and smart liquidity management aim at optimizing returns."
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