Low volatility advantage
Arbitrage index scores favourable on the risk parameters vis-a-vis equities.
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BAJAJ FINSERV ASSET MANAGEMENT LIMITED.
The investment objective of the scheme is 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.
Disclaimer: However, there is no assurance that the investment objective of the scheme will be achieved.
Nimesh Chandan has over 24 years of experience in the Indian Capital Markets. He has spent 18 years in Fund Management- managing and advising domestic and international investors, retail as well as institutional. Prior to joining Bajaj Finserv Asset Management Ltd., he has worked with Canara Robeco Asset Management as Head of Investments, Equities (Domestic and Offshore). He has also worked with other asset management companies including Birla Sunlife Asset Management, SBI Asset Management and ICICI Prudential Asset Management.
Siddharth Chaudhary joined the Company in July 2022 as a Senior Fund Manager – Fixed Income. Prior to this, he was associated with Sundaram Asset Management Co. Ltd from April 2019 - July 2022 as Head Fixed Income – Institutional Business. From April 2017 – March 2019, he served as a Head – Fixed Income, and from August 2010 – March 2017 as a Fund Manager – Fixed Income with Sundaram Asset Management Co. Ltd. During June 2006 – September 2010, he was working as Senior Manager, Treasury Dept in Indian Bank.
Under normal circumstances:
Equity and equity-related instruments including derivatives and stock options:
Maximum: 100%, Minimum: 65% (Risk profile – Very high)
Debt and money market instruments including the margin money deployed in derivative
transactions (including units of liquid schemes of Bajaj Finserv Mutual Fund):
Maximum: 35%, Minimum: 0% (Risk profile – Low to moderate)
Non-convertible preference shares:
Maximum: 10%, Minimum: 0% (Risk profile: Very High)
Under defensive circumstances:
Equity and equity related instruments including derivatives and stock options:
Maximum: 65%, Minimum: 0% (Risk profile – High)
Debt and money market instruments including the margin money deployed in derivative
transactions (including units of liquid schemes of Bajaj Finserv Mutual Fund):
Maximum: 100%, Minimum: 35% (Risk profile – Low to moderate)
Non-convertible preference shares:
Maximum: 10%, Minimum: 0% (Risk profile: Very High
For detailed asset allocation, please refer to the Scheme Information Document.
Entry load – Not applicable
Exit load – 0.25% of applicable NAV if redeemed/switched out within 15 days from the date of allotment.
Nil, if redeemed/switched out after 15 days from the date of allotment.
The scheme will not levy exit load in case the timelines for rebalancing portfolio as stated in SEBI circular dated March 30, 2022 is not complied with.
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Bajaj Finserv Gilt Fund
An open ended debt scheme investing in government securities across maturity with relatively high interest rate risk and relatively low credit risk
This product is suitable for investors who are seeking*:
Arbitrage Funds are hybrid mutual funds that aim to generate returns by exploiting price differences of the same security in the cash and derivatives markets. When such differences arise, the fund simultaneously buys in one market and sells in the other, potentially locking in a small, low-risk spread. Because these trades are typically hedged, arbitrage funds tend to carry relatively low volatility compared with other equity-oriented funds.
They may be suitable for investors seeking short-term parking of money with equity taxation benefits and lower risk levels. However, returns depend on market volatility and available arbitrage opportunities, and are not guaranteed.
<!-- A flexi cap fund-->An arbitrage fund is an hybrid mutual fund that aims to profit from the price difference of the same asset between two markets. This could include buying an asset at a lower price in the spot market and selling it for higher in the derivatives market or capitalising on the price difference of an asset between two stock exchanges. The purchase and sale transactions are made simultaneously to benefit from brief pricing inefficiencies.
An arbitrage fund is suited to investors with a low-to-moderate risk appetite seeking to earn potentially reasonable returns over a short investment horizon.
No, earnings on arbitrage funds are subject to tax. Arbitrage funds are taxed as equity mutual funds. A short-term capital gains tax of 20% is levied on earnings held for less than year. For units held for more than a year, gains of up to Rs. 1.25 lakh are tax-exempt. Thereon, the tax rate is 12.5%.
Like all mutual funds, arbitrage funds are subject to market risks. However, they fall in the low-risk category. The instantaneous nature of arbitrage trades makes these funds less vulnerable to wider market trends.
No mutual fund investment is risk-free and equity funds are considered to carry greater risk than debt mutual funds. Additionally, flexi cap mutual funds may be more volatile than large cap funds, which tend to offer relatively stable returns because they invest in top-tier companies.
However, a skilled fund manager of a flexi cap fund will aim to mitigate risks by altering the allocation between the different market capitalisations based on the economic conditions and their insights.
Low volatality, no credit risk and benefits on equity taxation are some of the major advantages of Bajaj Finserv Arbitrage Fund.
This scheme can be a suitable option for risk-averse investors looking to park their surplus funds and those who are seeking an alternative to overnight funds.
NAVs are updated every business day and differ across plans. Please check the latest value on the AMC website or a trusted financial platform.
Assets Under Management figures change periodically. Refer to the most recent fund factsheet or the AMC’s official portal.
The fund’s risk level is disclosed under the SEBI Riskometer framework. For the most current rating, visit the scheme’s product page or latest factsheet.
Top holdings shift based on investment decisions. Please refer to the latest monthly portfolio statement on the AMC website.
The fund follows an arbitrage-driven strategy. For current asset mix details, consult the latest factsheet or scheme information document.
Returns fluctuate with market conditions. Review the latest performance metrics on the AMC site or a reliable financial platform or the latest factsheet.
The fund typically has no mandatory lock-in period. However, exit loads (if any) may apply—please review the scheme details for specifics.
Expense ratios vary between Direct and Regular plans and are revised periodically. Check the latest factsheet for up-to-date charges.
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Our Investment Philosophy reflects what we, as an organisation, believe will generate a good return on equity investment for our investors in the long term. It dictates our goals and guides decision making.
Alpha (a) is a term used in investing to describe an investment strategy’s ability to beat the market.
Alpha is thus also often referred to as excess return or the abnormal rate of return in relation to a benchmark, when adjusted for risk. Essentially, it means doing better than the crowd without taking disproportionate risk.
Collecting superior information
Analysts and portfolio managers strive to collect superior information about the business and the management of the company. They try to generate superior earnings forecast and the balance strength of the company and the industry, thereby trying to 'beat the market' on information edge. This is an important source of alpha for an investor. However, over the years, retaining the information edge has become more difficult and expensive. With a whole lot of investors trying to collect superior information, how can an investor be sure to continuously have accurate and material information about the companies, ahead of others, all the time?
Processing information better
Even if you don't have material information earlier than the crowd, you can still generate better outcomes if you are able to process this information better. Investors develop models and algorithms with enhanced predictive powers to forecast the next move. Fund managers who invest based on some pure formal analytical models are quantitative managers. Here, the goal is to try and beat other investors based on the sophistication of procedures or analytics. The analytical edge can be quite useful until it gets copied by many, and then it may stop generating superior returns.
Exploiting behavioural biases
As the name suggests, this edge is achieved by superior behaviour in reacting to the inputs available to maximise alpha. Modern finance assumes people behave with extreme rationality. However, researchers in behavioural finance have shown that this is not true. Moreover, these deviations from rationality are often systematic. Behavioural managers try to exploit situations where securities are mispriced by the market because of behavioural factors. At Bajaj Finserv AMC, we endeavour to combine the best of these edges.
