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Zerodha's Arbitrage Fund: Low Volatility, High Tax Efficiency
12 Aug
Summary
- New fund seeks to profit from price differences in equity and derivatives.
- Aims for tax-efficient parking of surplus cash for conservative investors.
- Minimum investment starts at Rs 5,000 for short-term horizons.
Zerodha Fund House has introduced its Arbitrage Fund, an open-ended investment scheme focusing on price differentials in equity and derivatives markets. The New Fund Offer (NFO) is open for subscriptions until August 14, after which it will reopen for continuous trading.
This fund strategy aims to generate returns by exploiting temporary price gaps between a stock and its derivative contract. When such opportunities are unavailable, the fund will temporarily invest in short-term debt instruments. The investment allocation is between 65-100% in equity and related instruments, including derivatives, and 0-35% in debt and money market instruments.
The Zerodha Arbitrage Fund is positioned for investors seeking a low-volatility strategy for short-term fund parking. Its structure, which includes equity and debt exposure, offers a tax-efficient approach for individuals in higher tax brackets. The minimum investment required is Rs 5,000, making it accessible for conservative investors with a horizon of a few months.
