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Deutsche Asset Management India launches arbitrage fund

PTI 12 Aug 2014, 23:13:28 PM IST
Mumbai: Deutsche Asset Management India launched an arbitrage fund today, in the open-ended equity scheme portfolio.

“The DWS Arbitrage Fund is an ideal investment solution for investors, seeking returns through arbitrage opportunities that exist in the equity and derivatives markets,” Deutsche AMC India head Suresh Soni said.  The new fund opens from August 13 would invest in arbitrage opportunities that may exist in the equity and derivatives markets.

The fund expects to predominantly invest in the cash futures arbitrage strategy, that is, buying a stock in the cash market and selling it in the futures market, resulting in a hedge, where the fund portfolio is locked in a spread and is not affected by price movements in the spot market and futures markets, a company release said.

Being an equity-oriented fund, it has a lower tax incidence for investors, compared to debt and liquid funds, with respect to dividend distribution and capital gains tax, the release said.

The portfolio seeks to generate returns by investing in arbitrage opportunities available in equity markets. It claims to have potential to earn higher post tax returns vis-a-vis debt and money market funds.