Zerodha Launches New Arbitrage Fund: NFO Ends Aug 14

Zerodha Fund House officially launched its new Arbitrage Fund on August 12, 2026, marking its entry into the arbitrage investment sector. This open-ended equity scheme is available for subscription during its New Fund Offer (NFO) period.

The NFO period for this fund concludes on August 14, 2026. Investors can initiate their investment with a minimum amount of ₹5,000.

Key Fund Details

• NFO Period: August 12 to August 14, 2026
• Minimum Investment: ₹5,000
• Fund Manager: Kedarnath Mirajkar
• Benchmark: NIFTY 50 Arbitrage TRI

The fund’s core strategy aims to generate returns by exploiting temporary price discrepancies of the same stock between the cash market and the futures market. This involves simultaneously purchasing a stock in the cash market and selling its corresponding futures contract to secure profits.

Investment Strategy & Allocation

To maintain its classification as an equity-oriented fund, the scheme intends to invest a minimum of 65% of its portfolio in equity and equity derivatives. During periods of limited arbitrage opportunities, the fund may allocate remaining assets to short-term debt instruments to ensure liquidity.

Tax Implications and Exit Load

Arbitrage funds are often favored by investors due to their tax treatment, being taxed similarly to equity mutual funds given their over 65% equity exposure. This can be advantageous for investors in higher tax brackets compared to other short-term savings options.

• Long-Term Capital Gains (>12 months): Taxed at 12.5% on amounts exceeding ₹1.25 lakh per financial year.
• Short-Term Capital Gains (<12 months): Taxed at 20%.
• Exit Load: 0.25% if units are redeemed or switched within 30 days of the allotment date.

While this fund aims for lower volatility than pure equity funds, it is not entirely risk-free. Returns can fluctuate based on the fund manager’s proficiency in identifying profitable spreads and the availability of such opportunities in the market.