What are arbitrage funds, should you invest and add these funds in your portfolio? Know more about arbitrage funds in this article
1.Arbitrage funds buy and sell the same asset in different markets, such as the cash market and futures market, to capitalise on the temporary price discrepancies.2.Since the buying and selling prices are known to the fund manager, these are considered low-risk funds compared to other mutual funds.
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4.The expense ratio for arbitrage funds typically ranges from 0.5% to 1.5% per annum.
5.The returns from arbitrage funds are taxed as equity funds, making them more tax-efficient compared to other fixed-income products.
Content courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.
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This story originally appeared on: India Times - Author:Faqs of Insurances
