Zerodha Launches New Arbitrage Fund: Invest Rs 5,000+

Zerodha Fund House has launched its Arbitrage Fund, an open-ended equity scheme designed to generate returns by exploiting price discrepancies between the equity spot and derivatives markets.

The New Fund Offer (NFO) is now open for subscription, with a minimum investment set at Rs 5,000.

Key Fund Details

• Minimum Investment: Rs 5,000
• NFO Subscription Deadline: August 14
• Fund Manager: Kedarnath Mirajkar
• Benchmark Index: Nifty 50 Arbitrage Index TRI

Investment Approach

The fund’s strategy involves allocating between 65-100% to equity and equity-related instruments, including derivatives. Concurrently, it directs 0-35% of its assets into debt and money market instruments.

This approach aims to generate income through specific market maneuvers:

• Exploiting arbitrage opportunities across various derivative contracts.
• Capitalizing on price differences across different expiry periods of the same stock.
• Parking funds in short-term debt when viable arbitrage opportunities are unavailable.

Target Investor Profile

The Arbitrage Fund seeks to provide returns with relatively low volatility and tax efficiency. It is positioned as suitable for investors seeking short-term cash parking and those with a conservative investment outlook.

Furthermore, the fund aims to appeal to individuals in higher tax brackets due to the advantageous equity fund taxation, which includes Long Term Capital Gains (LTCG) and Short Term Capital Gains (STCG).

After the NFO period concludes on August 14, the fund will transition to being continuously available for transactions.