Arbitrage funds’ spreads are attractive, and investors must take advantage

The prevalent discussions and debates in the mutual fund space have been about mid- and small-cap valuations, loss of tax advantage for debt funds, SIP (systematic investment plan) mobilizations, new folios and the like. Apart from these, a development happening in recent times is that in the equity market, the spread between the cash or spot segment and the stock futures segment has widened. In a volatile non-trended market, this spread tends to move up. This essentially being the cost of carrying a trade till the expiry of the futures contract, in a non-trended market, the uncertainty pushes it up.

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