NFO Alert : Groww Mutual Fund launches arbitrage fund

Groww Mutual Fund has announced the launch of the Groww Arbitrage Fund, an open-ended scheme investing in arbitrage opportunities. The scheme is designed to capture pricing differences between the cash and derivatives markets, with the aim of generating relatively stable returns with limited directional equity risk.

The new fund offer or NFO of the fund is open for subscription and will close on April 22.

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The performance of the fund will be benchmarked against Nifty 50 Arbitrage TRI and will be managed by Paras Matalia, Shashi Kumar, and Wilfred Gonsalves.

The scheme predominantly follows a “long cash – short futures” strategy, wherein equity positions in the cash market are hedged by corresponding positions in the futures market. This approach aims to reduce sensitivity to market movements by creating hedged positions while seeking to benefit from price differentials. There is no assurance or guarantee that such opportunities will always be available or that the scheme will achieve its investment objective.

In addition, the scheme may allocate up to 35% of its assets to debt and money market instruments, with a focus on liquidity, safety, and portfolio efficiency subject to market risk associated with such instruments.

The exit load is nil and the minimum investment amount is Rs 500 and in multiples of Re 1 thereafter.

Arbitrage funds are typically positioned as relatively low-volatility, hedged equity strategies, and may be considered as an alternative to certain traditional fixed-income instruments, particularly for investors seeking tax-efficient solutions and willing to accept market-linked returns.

The scheme is structured to maintain over 65% exposure to equity and equity-related instruments*, thereby aiming to qualify as an equity-oriented fund for taxation purposes, subject to prevailing tax laws. Tax treatment is subject to change and may vary based on individual circumstances; investors should consult their tax advisor for specific advice.

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Who may consider investing?

According to the fund house. the Groww Arbitrage Fund may be suitable for investors who are seeking a relatively lower-risk, hedged investment option, have a minimum investment horizon of one year and are looking for tax-efficient alternatives to certain fixed-income instruments, subject to their risk profile and tax situation.

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