An arbitrage fund buys a stock in the cash market and simultaneously sells the same in the futures market at a higher price.
The difference in prices becomes profit, reducing market risk.
📌 Key Highlights of JioBlackRock Arbitrage Fund
| Feature | Details |
|---|---|
| Fund Type | Arbitrage Fund (Hybrid) |
| Ideal For | Low-risk investors, short-term parking |
| Tax Treatment | Equity taxation |
| Risk Level | Low |
| Objective | Generate stable returns via arbitrage strategies |
⚖️ Who Should Invest?
Recommended For:
- Investors looking for low-volatility returns
- Short-term parking of idle funds (3–12 months)
- Those wanting tax efficient alternative to liquid or debt funds
Avoid If:
- You expect very high returns like equity funds
- Your investment horizon is below 30 days
📊 Expected Returns Comparison
| Investment Option | Expected Annual Return | Risk Level |
|---|---|---|
| Savings Account | 2.5%–4% | Very Low |
| Arbitrage Fund | 5.5%–7.5% | Low |
| Liquid Fund | 5%–6% | Low |
| Bank FD | 6%–7.5% | Medium |
📜 Tax Benefits
| Tax Type | Treatment |
|---|---|
| < 1 Year | Short-Term Equity Tax: 15% on profits |
| > 1 Year | Long-Term Equity Tax: 10% (after indexation exemption) |
| Dividend Tax | Taxed as income in your slab |
🧠 Risks to Consider
Although risk is low, a few things to note:
- Returns depend on arbitrage opportunities availability
- Short-term market volatility may reduce spreads temporarily
- Exit load may apply if withdrawn too early
📅 Ideal Investment Duration
- 3–6 months for parking funds
- 6–12 months for tax-efficient safer returns
📍 How Does JioBlackRock Arbitrage Fund Work in Real Life?
Example:
- Buy stock at ₹100 in cash market
- Sell it at ₹102 in futures market
- Profit = ₹2 (low risk)
This strategy repeats across multiple stocks, creating stable returns.
❓ Frequently Asked Questions (FAQs)
Q1. Is JioBlackRock Arbitrage Fund safe?
Yes. The strategy is designed to minimize market risk and focuses on arbitrage spreads.
Q2. Can I invest for short-term goals?
Yes, ideal for 3–12 months short-term parking.
Q3. Does the value fluctuate like equity funds?
Minor fluctuations may occur, but volatility remains very low.
Q4. What type of taxation applies?
It falls under equity taxation, which is tax-efficient.
Q5. How much return can I expect?
Estimated returns range between 5.5%–7.5% annually, depending on arbitrage opportunities.
🏁 Conclusion
If you're hunting for a low-risk mutual fund that can comfortably beat savings account returns while offering tax efficiency, the JioBlackRock Arbitrage Fund deserves a spot in your portfolio. It's especially valuable for investors seeking stability + liquidity.
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