Mahindra Manulife Mutual Fund launches Arbitrage Yojana

Mahindra Manulife Mutual Fund has launched Mahindra Manulife Arbitrage Yojana for investment in arbitrage opportunities.

The new fund offer will open on August 12, 2020, and close on August 19 and reopen for continuous sale and repurchase from August 25, the company said on August 11.

A wholly-owned subsidiary of Mahindra and Mahindra Financial Services (MMFSL), the company said the scheme was an open-ended one for investment in arbitrage opportunities available in equity, derivatives and debt markets.

"The scheme is suitable for investors who are looking for short term investment options with relatively low risk, tax-efficient returns and looking to park money in a scheme relatively less impacted by market volatility," it said.

Mahindra Manulife Mutual Fund would invest in arbitrage position between cash and futures trading on exchanges, invest in a basket of stocks and short the corresponding futures against it, or derive higher returns from the implied cost of carrying between the underlying and the derivatives market, it said.

As per the press release, the company, under normal circumstances, would invest a minimum of 65-100 percent in equity and equity-related instruments, including equity derivatives, up to 35 percent in debt and money market securities including tri-party repo, reverse repo.

Under defensive circumstances, the scheme would invest 0- 65 percent in equity and equity-related instruments, including equity derivatives, up to 35 - 100 percent in debt and money market securities, including tri-party repo, reverse repo, and up to 10 percent in units issued by REITs & InvITs.

Mahindra Manulife Mutual Fund MD and CEO Ashutosh Bishnoi said the arbitrage yojana was suitable for investors seeking income through arbitrage opportunities between cash and derivative market and arbitrage opportunities within the derivative segment over the short term.

"The scheme will use several strategies to identify arbitrage opportunities across market cycles and offer returns at relatively lower volatility and lower risk,” he said.