Tata Mutual Fund has announced a new fund offering (NFO) for Tata Arbitrage Fund, a new open-ended equity scheme predominantly investing in arbitrage. Arbitrage opportunities are ones that take advantage of the price difference between the cash and futures value of a commodity or index. The NFO period for the scheme will begin on December 10, 2018 and will end on December 17, 2018. The scheme will reopen for subscription and redemption of units not later than December 21, 2018.
An arbitrage fund has the advantage of being taxed as an equity fund because it holds at least 65 percent of its total assets in equity. However, it carries the lower risk profile of a debt fund on account of its arbitrage strategy.
The scheme will invest between 65 to 100 percent of its assets in equity and equity-linked securities and derivatives. The scheme may also invest up to 35 percent of its assets in debt, cash and money market instruments. The latter may also include investment in liquid schemes of Tata Mutual Fund. The scheme will not invest in credit default swaps, foreign securities, equity-linked debentures.
Tata Arbitrage Fund will be benchmarked against the Nifty 50 Arbitrage Index. The benchmark index measures the performance of a portfolio consisting of equity and futures of equivalent equity, short-term debt instruments and cash.
| Index Name | 1-yr Returns (%) | 5-yr Returns (%) |
| Nifty 50 Arbitrage Index | 4.82 | 6.48 |
*Returns data as of Nov. 30, 2018
The fund will be managed by Sailesh Jain, who joined the fund house last month from IDFC Securities. Jain also manages Tata Digital India Fund, which is Tata’s top performing fund with one-year returns of 35.39 percent. (As on Dec. 6, 2018)
Key information about the Tata Arbitrage Fund NFO:
| NFO period | December 10 – December 17, 2018 |
| Minimum application amount | Rs. 5,000 |
| Exit load | Exit load of 0.25 percent, if units are redeemed or switched out on/ before expiry of 30 Days from allotment date |
| Benchmark | Nifty 50 Arbitrage Index |
| Fund manager | Sailesh Jain |
Other Funds by Tata Asset Management
| Scheme Name | 3Y Returns (%) | AUM (Rs. Cr.) | Category |
| Tata Digital India Fund | 21.92 | 111.56 | Sectoral/Thematic Fund |
| Tata Banking and Financial Services Fund | 18.01 | 253.91 | Sectoral/Thematic Fund |
| Tata India Consumer Fund | 17.4 | 973.5 | Sectoral/Thematic Fund |
| Tata Retirement Savings Fund Progressive Plan | 14.17 | 451.51 | Multi Cap Fund |
| Tata Index Sensex Direct | 14.14 | 5.04 | Large Cap Fund |
| Tata India Tax Savings Fund | 13.2 | 1398.27 | ELSS |
| Tata Index Nifty Direct | 12.23 | 11.08 | Large Cap Fund |
| Tata Retirement Savings Fund Moderate Plan | 12.09 | 659.89 | Aggressive Hybrid Fund |
| Tata Large & Mid Cap Fund | 11.46 | 1297.88 | Large & Mid Cap Fund |
| Tata Midcap Growth Direct Plan | 11.31 | 692.48 | Mid Cap Fund |
| Tata Large Cap Direct Plan | 10.75 | 799.42 | Large Cap Fund |
| Tata Ethical Direct Plan | 10.32 | 517.86 | Sectoral/Thematic Fund |
| Tata Equity PE Fund | 8.78 | 3519.81 | Value Fund |
| Tata Retirement Savings Fund Conservative Plan | 8.76 | 133.5 | Conservative Hybrid Fund |
| Tata Gilt Securities Fund | 8.01 | 117.76 | Gilt Fund |
| Tata Income Fund | 7.49 | 112.41 | Medium to Long Duration Fund |
| Tata Dynamic Bond Fund | 7.09 | 701.43 | Dynamic Bond Fund |
| Tata Hybrid Equity Fund | 6.91 | 5552.16 | Aggressive Hybrid Fund |
| Tata Liquid Fund | 6.9 | 15156.38 | Liquid Fund |
| Tata Equity Savings Fund | 6.24 | 214.93 | Equity Hybrid Saving Fund |
{Data as on Feb 20, 2020; Source: Value Research}