Dhirendra Kumar discusses the suitability of arbitrage funds for senior citizens
Are arbitrage funds a safe investment for senior citizens in the current situation?
- M B Sahni
Arbitrage funds are safe by their very design but returns from these funds can be very inconsistent because it is subject to the availability of arbitrage avenues. While these funds enjoy equity-like taxation, their returns will typically range between liquid and ultra-short-duration funds.
As mentioned earlier, the returns from arbitrage funds can be very inconsistent because, at times, there are not enough arbitrage opportunities in the market.
So, while on the safety count, arbitrage funds are reasonably safe, but I would say that if you are looking at making an investment in a fund from where you intend to derive a steady income, then arbitrage funds may not be the best avenue.