The new fund offer or NFO of the scheme is open for subscription and will close on November 18. The scheme will re-open for continuous sale and repurchase on November 21.
The fund will aim to achieve capital appreciation and income by predominantly investing in arbitrage opportunities in the cash and derivative segments of equity markets, as well as arbitrage opportunities within the derivative segment, with the remainder allocated to debt and money market instruments, according to a release by the fund house.
The fund will be benchmarked against Nifty 50 Arbitrage Index. The scheme will be managed by Rajasa K, Yogik Pitti, and Pallab Roy.
The minimum investment amount for lumpsum investment is Rs 5,000 and for SIP is Rs 500.
An exit load of 0.25% will be applicable if units are redeemed / switched out within 30 days from the date of allotment and the exit load will be nil thereafter.The fund will employ an active investment strategy, adjusting its defensive or aggressive postures depending on available opportunities. It will aim to capitalise on the implied cost of carry between the underlying cash and derivatives market, offering potential returns for investors. Furthermore, holding arbitrage funds for over a year will allow investors to benefit from lower capital gains tax rates, making it a tax-efficient investment option, said the release. “Arbitrage funds in India are ideal for investors seeking short term income generation without exposing their investments to high risk. Franklin India Arbitrage Fund is a valuable addition to our investment portfolio as we continue to expand our product suite to meet the varied needs of our investors, based on their risk profile. As this is a low-risk fund, it is a valuable investment opportunity for both individual and institutional clients in India,” said Avinash Satwalekar, President, Franklin Templeton–India.
The scheme is suitable for investors who are seeking short term income generation and want a hybrid scheme that aims to generate returns from arbitrage and other derivative strategies predominantly in cash and derivative segments of the equity market and potential arbitrage opportunities available within the derivative segment. The balance will be invested in fixed income and money market instruments.
