Contents
All arbitrage funds compared
Largest fund first. Returns are for the direct plan, compound annual, to 13 October 2026. The base expense ratio is what the fund house charges; the total adds brokerage, exchange charges and taxes on the fund's trades, which are high for arbitrage funds because they trade every month. Returns are after all of it.
| Fund | Base expense ratio, direct | Total expense ratio, direct | Total expense ratio, regular | 1 year | 3 years | 5 years | Average assets |
|---|---|---|---|---|---|---|---|
| Kotak Arbitrage FundKotak Mahindra Mutual Fund | 0.33% | 2.32% | 2.90% | 6.64% | 7.38% | 6.95% | ₹74,963 cr |
| SBI Arbitrage FundSBI Mutual Fund | 0.34% | 1.47% | 1.99% | 6.43% | 7.17% | 6.80% | ₹46,867 cr |
| ICICI Prudential Arbitrage FundICICI Prudential Mutual Fund | 0.34% | 1.63% | 2.16% | 6.51% | 7.23% | 6.75% | ₹34,615 cr |
| Invesco India Arbitrage FundInvesco Mutual Fund | 0.34% | 2.20% | 2.87% | 6.72% | 7.37% | 7.08% | ₹30,062 cr |
| Aditya Birla Sun Life Arbitrage FundAditya Birla Sun Life Mutual Fund | 0.27% | 1.23% | 1.94% | 6.63% | 7.34% | 6.82% | ₹27,071 cr |
| HDFC Arbitrage FundHDFC Mutual Fund | 0.34% | 1.48% | 2.02% | 6.49% | 7.20% | 6.69% | ₹25,149 cr |
| Tata Arbitrage FundTata Mutual Fund | 0.26% | 1.57% | 2.25% | 6.65% | 7.39% | 6.87% | ₹24,691 cr |
| Nippon India Arbitrage FundNippon India Mutual Fund | 0.31% | 1.35% | 2.04% | 6.59% | 7.22% | 6.80% | ₹17,157 cr |
| Edelweiss Arbitrage FundEdelweiss Mutual Fund | 0.33% | 1.53% | 2.20% | 6.56% | 7.31% | 6.91% | ₹14,904 cr |
| UTI - Arbitrage FundUTI Mutual Fund | 0.26% | 1.26% | 1.81% | 6.49% | 7.24% | 6.72% | ₹11,249 cr |
| Axis Arbitrage FundAxis Mutual Fund | 0.27% | 1.40% | 2.09% | 6.57% | 7.28% | 6.83% | ₹10,422 cr |
| Bandhan Arbitrage FundBandhan Mutual Fund | 0.29% | 1.63% | 2.35% | 6.36% | 7.22% | 6.75% | ₹7,984 cr |
| DSP Arbitrage fundDSP Mutual Fund | 0.30% | 1.16% | 1.80% | 6.40% | 7.12% | 6.65% | ₹6,693 cr |
| Mirae Asset Arbitrage FundMirae Asset Mutual Fund | 0.13% | 2.48% | 3.25% | 6.62% | 7.28% | 6.77% | ₹3,788 cr |
| Motilal Oswal Arbitrage FundMotilal Oswal Mutual Fund | 0.10% | 0.99% | 1.98% | 6.88% | – | – | ₹3,319 cr |
| HSBC Arbitrage FundHSBC Mutual Fund | 0.22% | 1.45% | 2.07% | 6.44% | 7.11% | – | ₹3,170 cr |
| Parag Parikh Arbitrage FundPPFAS Mutual Fund | 0.19% | 0.99% | 1.39% | 6.31% | – | – | ₹2,745 cr |
| WhiteOak Capital Arbitrage FundWhiteOak Capital Mutual Fund | 0.38% | 2.35% | 3.13% | 7.02% | – | – | ₹2,146 cr |
| Franklin India Arbitrage FundFranklin Templeton Mutual Fund | 0.23% | 1.20% | 1.97% | 6.94% | – | – | ₹1,676 cr |
| Bajaj Finserv Arbitrage FundBajaj Finserv Mutual Fund | 0.32% | 1.30% | 2.00% | 6.43% | 6.90% | – | ₹1,286 cr |
| Baroda BNP Paribas Arbitrage FundBaroda BNP Paribas Mutual Fund | 0.31% | 1.47% | 2.24% | 6.17% | 7.20% | – | ₹1,088 cr |
| quant Arbitrage Fundquant Mutual Fund | 0.28% | 1.60% | 2.25% | 7.46% | – | – | ₹817 cr |
| JioBlackRock Arbitrage FundJio BlackRock Mutual Fund | 0.28% | 1.99% | 3.26% | – | – | – | ₹567 cr |
| JM Arbitrage FundJM Financial Mutual Fund | 0.35% | 1.42% | 2.07% | 6.26% | 6.88% | 6.42% | ₹421 cr |
| Sundaram Arbitrage Fund(Formerly Known as Prinicpal Arbitrage Fund)Sundaram Mutual Fund | 0.20% | 0.98% | 1.70% | 6.70% | 7.17% | – | ₹300 cr |
| LIC MF Arbitrage FundLIC Mutual Fund | 0.24% | 1.04% | 1.62% | 6.59% | 7.03% | 6.60% | ₹293 cr |
| NJ Arbitrage FundNJ Mutual Fund | 0.25% | 1.05% | 1.64% | 6.18% | 6.74% | – | ₹255 cr |
| Union Arbitrage FundUnion Mutual Fund | 0.34% | 1.61% | 2.24% | 6.51% | 7.12% | 6.55% | ₹233 cr |
| Old Bridge Arbitrage FundOld Bridge Mutual Fund | 0.12% | 1.09% | 1.94% | – | – | – | ₹227 cr |
| The Wealth Company Arbitrage FundThe Wealth Company Mutual Fund | 0.20% | 1.50% | 2.18% | – | – | – | ₹144 cr |
| TRUSTMF Arbitrage FundTrust Mutual Fund | 0.17% | 1.42% | 2.19% | 6.35% | – | – | ₹142 cr |
| Mahindra Manulife Arbitrage FundMahindra Manulife Mutual Fund | 0.30% | 1.15% | 1.91% | 6.08% | 6.33% | 5.84% | ₹134 cr |
| Bank of India Arbitrage FundBank of India Mutual Fund | 0.30% | 2.14% | 2.82% | 6.22% | 6.75% | 5.94% | ₹125 cr |
| Helios Arbitrage FundHelios Mutual Fund | 0.42% | 1.76% | 2.28% | – | – | – | ₹123 cr |
| PGIM India Arbitrage FundPGIM India Mutual Fund | 0.31% | 1.23% | 1.90% | 6.34% | 6.97% | 6.47% | ₹92 cr |
| Groww Arbitrage FundGroww Mutual Fund | 0.21% | 1.86% | 2.56% | – | – | – | ₹85 cr |
| ITI Arbitrage FundITI Mutual Fund | 0.21% | 1.10% | 1.80% | 6.40% | 7.18% | 6.22% | ₹68 cr |
| Samco Arbitrage FundSamco Mutual Fund | 0.32% | 1.09% | 2.54% | 5.07% | – | – | ₹29 cr |
| Capitalmind Arbitrage FundCapitalmind Mutual Fund | 0.18% | 1.18% | 1.97% | – | – | – | ₹22 cr |
| Zerodha Arbitrage FundZerodha Mutual Fund | 0.20% | 2.31% | No regular plan | – | – | – | ₹19 cr |
Expense ratios as disclosed on 13 October 2026; brokerage, transaction costs and levies in the total are averages since 1 April, annualised, as AMFI publishes them. Returns: Direct-Growth plan NAVs to 13 October 2026. Average assets: July–September 2026, all plans. All from AMFI. A dash means the fund is too young for the period. The order is by size; it is not a ranking or a recommendation.
What is an arbitrage fund?
An arbitrage fund is a hybrid mutual fund that SEBI requires to follow an arbitrage strategy, with at least 65% of its assets in equity and equity-related instruments. The rest sits in short-term debt to meet margin and liquidity needs: certificates of deposit, government securities maturing within a year, and units of liquid or money market funds.
Despite the shares it holds, it is not a bet on the stock market. Each share it buys is matched by a sale of the same share in the futures market, so price moves on the two sides cancel out.
How arbitrage funds earn
A stock’s futures price is usually a little above its share price, and the two meet at expiry. The fund buys the share, sells the future and, when the contract expires, earns the difference, whatever the share did in between. It then rolls the position into the next month.
That gap is roughly the cost of holding the shares until expiry, so it tends to follow short-term interest rates. This is why arbitrage fund returns have usually been close to liquid fund returns. When markets are quiet, or many funds chase the same trades, the gap narrows and returns fall; when traders are keen to buy futures, it widens.
Why the expense ratio looks high
Since 1 April 2026 a fund’s total expense ratio is its base expense ratio, the fund house’s own fee, plus brokerage, exchange charges and statutory levies such as securities transaction tax (STT) on the fund’s trades. Arbitrage funds trade every month, so these costs are large, and the Finance Act, 2026 raised STT on the sale of futures from 0.02% to 0.05%.
These costs were always paid; they are now shown separately. The NAV, and so every return in the table, is already after them. Use the base expense ratio to compare what fund houses charge, and the returns to judge what you actually earned. How the expense ratio works.
How arbitrage funds are taxed
Under the Income-tax Act, 2025, a fund counts as equity-oriented if, on average over the year, at least 65% of its money is in listed shares of Indian companies (section 198(8)). Arbitrage funds are run to stay above that level, because their hedged share purchases are holdings of listed shares, and fund houses treat them as equity-oriented funds. The scheme documents state how each fund is treated.
- Held 12 months or less: gains are short-term and taxed at 20%.
- Held longer: gains are long-term. The first ₹1.25 lakh a year of long-term gains on equity shares and equity-oriented funds together is tax-free; the rest is taxed at 12.5%.
- Surcharge, where it applies, and 4% cess come on top. STT of 0.001% is charged when you redeem.
For resident investors there is no TDS on capital gains when you redeem; dividend (IDCW) payouts above ₹10,000 in a year have 10% tax deducted. Tax rules change; check your own case with a tax adviser.
Arbitrage fund or liquid fund?
- Tax: this is the main difference. Liquid fund gains are taxed at your slab rate however long you hold. Arbitrage fund gains are taxed at 20% within a year and 12.5% after a year (above ₹1.25 lakh). If your slab rate is above 20%, an arbitrage fund is usually taxed less; at lower slab rates, a liquid fund can be.
- Exit load: a liquid fund’s load ends after 7 days. Many arbitrage funds charge an exit load if you redeem in the first few weeks; the scheme document gives each fund’s terms.
- Day-to-day NAV: an arbitrage fund’s NAV can dip on some days when the gap between cash and futures prices moves against it, and usually recovers by expiry. A liquid fund’s NAV rarely falls.
- Returns: similar over time; compare this table with the liquid funds table.
Risks to know
- Returns are not fixed: when arbitrage gaps are thin, returns can fall below those of liquid funds.
- Too few opportunities: if a fund cannot find enough arbitrage trades, it can move to the defensive allocation set out in its scheme document, which changes what you hold.
- Costs: trading costs and taxes on trades come out of returns, and rise if STT goes up again.
How to choose an arbitrage fund
- Direct plan: the same portfolio for a lower expense ratio.
- Base expense ratio: compare the fund house’s fee; the total depends mostly on trading.
- Returns over three years: short periods swing with the arbitrage gap; longer ones show how well a fund executes.
- Exit load: check how long it lasts if you may need the money soon.
Questions people ask
Over the year to 13 October 2026, the direct plans of 33 arbitrage funds returned between 5.07% and 7.46%, with a median of 6.49%. Returns depend on the gap between cash and futures prices, which tends to move with short-term interest rates; they are not fixed.
Since April 2026 the total expense ratio includes brokerage, exchange charges and taxes on the fund's own trades. Arbitrage funds trade every month, so those costs are large: the median direct plan's base expense ratio was 0.28% but its total was 1.44%. The fund's NAV, and so its returns, are already after these costs.
Fund houses treat them as equity-oriented funds. Gains on units held 12 months or less are taxed at 20%; held longer, long-term gains above ₹1.25 lakh a year (counted together with other equity gains) are taxed at 12.5%. Surcharge and cess apply on top.
Their returns have been similar; the difference is mostly tax and access. If your slab rate is above 20%, an arbitrage fund is usually taxed less. A liquid fund has no exit load after 7 days and a steadier day-to-day NAV, which suits money you may need at very short notice.
Over a few days the NAV can dip. Over the year to 13 October 2026, every one of the 33 arbitrage funds with a year's record had a positive return, the lowest 5.07%, but nothing guarantees that.
Related
This page is educational research based on AMFI data. It is not a recommendation to invest in any scheme, or personalised investment advice. Mutual fund investments are subject to market risks; read all scheme related documents carefully. Past returns do not guarantee future returns. Registration granted by SEBI, enlistment with IAASB and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.