Top Arbitrage Mutual Funds for Investment in January 2025

Arbitrage mutual funds are a type of hybrid fund that makes money by taking advantage of price differences between markets. They do this by buying and selling the same security in different markets at the same time, profiting from the small price changes that happen temporarily. If an investor wants to invest their money for more than a year, and looking for a better after-tax return they can consider investing in Arbitrage mutual funds.

In this fund, the fund manager only invests in equity when they find an opportunity to earn returns. If there are no arbitrage opportunities available in that case, the fund invests in short-term money instruments and securities.

Long-term Capital Gain Tax

Arbitrage funds are taxed the same as equity mutual funds. If you hold your investment for more than a year, you’ll pay a long-term capital gains tax of 12.5%. If you sell it within a year, in that case, you’ll be charged a short-term capital gains tax of 20%.

If you want to invest in Arbitrage Mutual Funds, you can consider investing in these top arbitrage funds for investment in January 2025:

• Kotak Equity Arbitrage Fund
• Nippon India Arbitrage Fund

Kotak Equity Arbitrage Fund: the scheme’s objective is to generate income and capital growth. It is a hybrid fund that invests in arbitrage opportunities in cash, stocks and derivatives. The funds are also invested in money market instruments.

Nippon India Arbitrage Fund: The fund is a conservative mutual fund that focuses on generating income by taking advantage of price differences between assets in different markets. It is a hybrid fund that invests in stocks, derivatives, bonds, and short-term money market instruments.