Debt-plus-arbitrage FoFs offer tax edge for moderate-risk investors

The new fund offer of UTI Income Plus Arbitrage Active Fund of Fund (FoF) is currently open. Several fund houses have in recent times converted their pure debt funds into debt plus arbitrage strategies.

 

The government took away the indexation benefit of debt funds from April 1, 2023. “This affected retail flows into debt funds. Fund houses are trying to address this issue by coming up with a hybrid format that improves tax efficiency,” says Gautam Kalia, head–investment solutions and distribution, Mirae Asset Sharekhan.

 

How the fund works 

These FoFs invest in a mix of debt and arbitrage funds. “The