I want to invest in debt funds, but holding back because of the high tax rates. I would like to know about the safety, returns and taxation rates in arbitrage funds. Can you help?
- Shivakumar
Arbitrage funds don't invest directly in equity. They try to look for the arbitrage opportunities between the cash and derivative segments in the stock market. Due to this investment strategy, they are considered a relatively safer investment option.
If you have a holding period of more than a year, you can consider investing in arbitrage funds for slightly better tax-free returns. These funds are treated as equity funds for the purpose of taxation and returns on investments in them held over a year are tax free. The arbitrage category has given a return of around 8 per cent in the last year.
This article was originally published on November 03, 2015.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
