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Indiabulls Mutual Fund launches the Indiabulls Arbitrage Fund

Mumbai, 1st December 2014Indiabulls Mutual Fund announces the launch of a new scheme “Indiabulls Arbitrage Fund”. The new fund offer opens on 1st December 2014 and closes on 15th December 2014.

The primary objective of the scheme is to generate income by predominantly investing in arbitrage opportunities in the cash and derivative segments of the equity markets and the arbitrage opportunities available within the derivative segment and by investing the balance in debt and money market instruments. There is no assurance or guarantee that the investment objective of the scheme will be realized.

Indiabulls Mutual Fund believes that there is an arbitrage opportunity now

  • Currently, stocks that offer biggest arbitrage opportunities are the ones that are on FII restricted list.
  • It is believed that FII would continue to put money in Indian equities, thus resulting in increasing list of stocks in restricted category.
  • As FIIs can’t use arbitrage opportunities in these stocks, the spreads in these stocks tend to be higher and can be exploited only by domestic investors
  • The number of stocks in the F&O category could also increase going forward

Highlights 

  • Targets returns higher than the money market interest rates without taking the market risk
  • The fund would predominant be long cash market – short future market.
  • Fund would be fully hedged – each position in equity stock shall be hedged by an equal and opposite position in the relevant derivative instrument.
  • Portfolio would be aggressively churned to take advantage of change in spreads.
  • No directional exposure in the portfolio. Truly market neutral.
  • Positions either reversed or rolled over at expiry.
  • Status of an equity oriented fund, thus lower tax incidence compared to debt funds with respect to dividend distribution and capital gain tax. In view of the individual nature of tax consequences, investors are advised to consult his/ her own professional tax advisor.

Investor suitability

Indiabulls Arbitrage Fund is an Open-ended Equity Scheme suitable for investors who are seeking*

  • Income over short to medium term
  • Investment predominantly in arbitrage opportunities in the cash & derivatives segment of the equity market and equity & equity related securities
  •  Low Risk               (Blue)

Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

Note: Risk is represented as:

  (BLUE) investors understand that their principal will be at low risk.   (YELLOW) investors understand that their principal will be at medium risk   (BROWN) investors understand that their principal will be at high risk

 Asset Allocation

Instruments Indicative allocation(% of total assets)

(Minimum – Maximum)

Risk Profile(High/ Medium/ Low)
Equity and equity related securities* 65% to 100% Medium to High
Equity Derivatives* 65% to 100% Medium to High
Debt & Money market securities/ instruments 0% to 35% Low

* The asset allocation to the extent of 65% to 100% in Equity and Equity Derivatives is on account of arbitrage strategy pursued by the fund from the hedging perspective and not the exposure.

In the event of adequate arbitrage opportunities not being available in the equity and derivative markets, then 100% of the portfolio will be invested in short term debt and money market instruments. The rebalancing of the portfolio in accordance with the asset allocation pattern indicated above shall be done within a period of 30 days and will be ensured that the portfolio adheres to the investment objective of scheme.

SCHEME FEATURES

Nature of the Scheme Open-ended Equity Scheme
Fund Managers Mr. Sumit Bhatnagar & Mr. Malay Shah
Benchmark Index CRISIL Liquid Fund Index
Load Structure Entry : Not Applicable
Exit  : 0.5% if redeemed/switched out within three months from the date of allotment, Nil – if redeemed/switched out after three months from the date of allotment
Plans Direct & Regular
Options Growth, Dividend & Bonus
Sub Options Dividend option: Dividend Payout Facility & Dividend Reinvestment Facility
Minimum Application Amount Rs. 5,000 and in multiples of  Re. 1 thereafter
Rs. 1,000 and in multiples of Re. 1 thereafter (For Systematic Investment Plan (SIP))
Minimum Additional Purchase Amount Rs. 1,000 and in multiples of Re. 1 thereafter.
Minimum Redemption Amount Minimum of Rs. 1000 or account balance, whichever is lower and in multiples of Re. 1 thereafter.
SIP/STP/SWP SIP/STP/SWP facilities are available

 

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