Arbitrage fund is a type of mutual fund that leverages the price differential in the cash and derivatives market to generate returns. The returns are dependent on the volatility of the asset.
These funds are hybrid in nature as they have the provision of investing a sizeable portion of the portfolio in debt markets. These funds capitalize on the market inefficiencies and generate profits for the investors. For income tax purpose, the arbitrage mutual funds are classified as Equity oriented funds.
Here is a list of best arbitrage mutual funds in India.
