All you need to know about Bajaj Finserv Arbitrage Fund

All you need to know
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Before exploring the features of the Bajaj Finserv Arbitrage Fund, let's understand what an arbitrage fund is. Arbitrage funds are a type of mutual fund that capitalise on the price differential of an asset (like stocks) between two or more markets. Thus, these schemes purchase securities in one market at a lower price and simultaneously sell them in another at a higher price, thereby locking in profits from the difference in price. Arbitrage funds typically invest in equity and debt instruments and are considered relatively low risk with the potential for moderate returns.

  • Table of contents
  1. Key features of the Bajaj Finserv Arbitrage Fund
  2. Why consider the Bajaj Finserv Arbitrage Fund?
  3. FAQ

Key features of the Bajaj Finserv Arbitrage Fund

The Bajaj Finserv Arbitrage Fund is an open-ended scheme that primarily targets arbitrage opportunities between the cash and derivatives segments of equity markets and invests the balance in debt and money market instruments.

Investment objective: To seek to generate returns by investing in arbitrage opportunities in the cash and derivatives segments of the equity markets and by investing balance in debt and money market instruments. However, there is no assurance that the investment objective of the scheme will be achieved.

The fund employs several strategies that are executed by experienced fund managers. These strategies include cash-future arbitrage, rolling over of futures transactions, and dividend arbitrage, among others. The fund managers actively manage the portfolio to adjust to market volatilities and regulatory compliances.

Asset allocation: The brief asset allocation of the fund includes a mix of equity and equity-related instruments (65%-100%), debt & money market instruments (0%-35%), and non-convertible preference shares (up to 10%). The diverse mix seeks to strike a balance between very high-risk opportunities in equities and lower-risk debt instruments.

Why consider the Bajaj Finserv Arbitrage Fund?

One of the USPs of the Bajaj Finserv Arbitrage Fund is its investment approach that combines the potential for relatively steady returns with a defensive strategy against market volatility. This is particularly attractive in uncertain economic times or when the market is showing signs of fluctuation.

The fund's strategy to exploit arbitrage opportunities aims to benefit from temporary price differences that are often unaffected by market sentiment. This makes the Bajaj Finserv Arbitrage Fund an option for investors seeking to avoid the full impact of market downturns.

The Bajaj Finserv Arbitrage Fund is also suitable for investors who are looking for more than just limited impact on capital but are not quite ready to dive into the high-risk pool of pure equity investments. By investing in a mix of equity and debt, the fund can maintain liquidity and reduce volatility, which is crucial for those who may need to access their capital in the short term.

Moreover, the inclusion of debt and money market instruments adds a layer of relative stability to the fund, potentially providing a buffer during market dips.

Here are some reasons to consider investing in the Bajaj Finserv Arbitrage Fund:

  • Risk mitigation: The fund’s strategies are designed to capitalise on arbitrage opportunities, thereby minimising risk.
  • Diversification: With a mix of equities, debt, and money market instruments, it provides a diversified portfolio.
  • Fund management: The fund management of Bajaj Finserv Asset Management Ltd. in picking the arbitrage opportunities can be beneficial to investors.

Conclusion

The Bajaj Finserv Arbitrage Fund features a balanced approach to investing by exploiting arbitrage opportunities while aiming to minimise risk. With a diverse allocation and strategic investment in a variety of instruments, it is tailored for investors seeking to benefit from the pricing disparity between markets. Managed by the seasoned financial experts at Bajaj Finserv Asset Management Ltd., the fund can be a suitable option for investors who prefer conservative gains over high-risk investments.

Faqs:

What is an arbitrage fund?
An arbitrage fund is a type of mutual fund that seeks to profit from the price differences of an asset in different markets.

What is the Bajaj Finserv Arbitrage Fund?
It is a scheme offered by Bajaj Finserv Mutual Fund that invests in arbitrage opportunities across equity, debt, and money market instruments.

What is the Bajaj Finserv Arbitrage Fund?
It is a scheme offered by Bajaj Finserv Mutual Fund that invests in arbitrage opportunities across equity, debt, and money market instruments.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
This document should not be treated as endorsement of the views/opinions or as investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purpose only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.