Samco MF launches tax-efficient arbitrage fund for high-tax slab investors

The scheme aims to invest in arbitrage opportunities between spot and futures prices of traded equities and within derivatives. If none are available, the Fund Manager may invest in debt and money mar

Samco Mutual Fund has launched Samco Arbitrage Fund, an open-ended hybrid scheme focussed on arbitrage. It is ideal for investors in higher tax slabs as it is treated as an equity-oriented fund for taxation purposes. The fund is benchmarked against NIFTY 50 Arbitrage TRI.

 

Arbitrage is a strategy where one simultaneously buys and sells the same underlying security or its derivatives in different market segments to take advantage of price differences and generate a profit.

 

The portfolio allocation for this investment strategy primarily emphasises equities and equity-related instruments, with a minimum of 65 per cent and up to 100 per cent of net assets allocated to these hedged exposures.

 

 

This allows for substantial growth potential driven by the equity market while managing risk through hedging strategies. The remaining portion, between 0 per cent and 35 per cent of the assets, is designated for debt and money market instruments. This component aims to add stability and provide liquidity to the portfolio, offering a balance between high-growth opportunities and risk mitigation. This blend allows for flexibility in responding to market conditions, balancing potential returns with risk management.  Index Funds are the go-to choice for India's young investors, shows survey

 

Samco Arbitrage Fund

 

Investment objective: The investment objective of this scheme is to generate capital appreciation and income by predominantly investing in arbitrage opportunities in the cash and the 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 that the investment objective of the scheme will be achieved.

 

Benchmark: The scheme has been benchmarked against NIFTY 50 Arbitrage TRI.

 

NFO period: Fund is open from November 11 to November 21, 2024. Continuous sale/repurchase is not allowed after December 3.

 

Minimum subscription amount: Investors can start with a minimum subscription amount of Rs 5,000 and increment in multiples of Rs 1 thereafter. The minimum additional purchase amount for the scheme is Rs 500, with increments in multiples of Rs 1.

 

Exit load: Investors will incur a 0.25 per cent exit load if the investment is redeemed or switched out within 7 days before the date of unit allotment. There will be no exit load thereafter.

 

Fund manager: Fund will be managed by Umeshkumar Mehta, Paras Matalia and Dhawal G. Dhanani.

  Who should invest?

 

Investors in higher tax slabs may find the scheme appealing, as it is treated as an equity-oriented fund for taxation purposes. Gains after 1 year are taxed at a Long-Term Capital Gains (LTCG) rate, applicable only if gains exceed Rs 1.25 lakh in a financial year [Tax rates applicable for financial year 2024-2025].