SBI Mutual Fund is launching an arbitrage fund: SBI Arbitrage Opportunities Fund. The fund would be initially open for subscription between September 15, 2006 and October 13, 2006. The fund will re-open for continuous purchase and redemption on November 8, 2006.
The fund will invest 65 to 85 per cent of its assets in equities and equity derivatives and the rest in debt and money market instruments. It will invest in stocks and would offset its investment in stocks by simultaneous equivalent investment in equity derivatives. The scheme would benchmark its performance against Crisil Liquid Fund Index.
The minimum initial investment in the scheme is Rs.25000. It would not charge any entry load during the new fund offer period but an exit load of 0.25% would be charged for investments below Rs 50 lakhs if redeemed upto April 20, 2007. For investments made on an ongoing basis, no entry load would be charged but an exit load of 0.25% for investments below Rs 50 lakhs would be levied, if redeemed within six months from the date of allotment.
This is the sixth such offering from a mutual fund. Presently, there are arbitrage funds from JM (JM Equity & Derivative and JM Arbitrage Advantage), Kotak (Kotak Cash Plus), Prudential ICICI (Prudential ICICI Blended Plan) and UTI Mutual (UTI Spread).