HDFC Arbitrage Fund

HDFC Arbitrage is a hybrid fund. It is being managed by Anil Bamboli since inception. Rakesh Vyas joined him in May 2012. The fund has given average performance in its five years of existence. New investors may skip this one for now.

Where does HDFC Arbitrage Fund invest your money ?

HDFC Arbitrage Fund is an equity oriented hybrid fund. 65.99% of the fund’s allocation is in equity and equity derivatives. 10-30% of the fund’s assets are normally allocated to debt securities. The equity portion has mid cap bias which means a substantial part of your money will be invested in stocks of medium sized companies. About 41.82% of the fund’s money is allocated to stocks of mid-size companies, 1.15% to stocks of small size companies and 57.03% to those of large companies. Mid-size stocks can give kicker returns as they turn into large stocks but this happens not so frequently. Close to 32.71% of the total assets are allocated to debt securities.

Suitable for what?
  • Child's education
  • Child's marriage
  • Planning for retirement
  • Home Purchase
Not suitable for?
  • Creating wealth
  • Short term needs
  • Lifestyle needs
Our recommendation for fresh investment
Not Recommended
Our recommendation for existing investment
How has HDFC Arbitrage Fund performed in the past?

If you had invested Rs 1 lakh when the fund was launched in Oct 2007, your value of investments would be around Rs 1.92 lakhs. The performance has been better or similar to other large cap mutual funds. The fund has been giving at around 7.11% every year for those who stayed invested for last 5 years. 

Assume you had invested Rs. 10,000 every month in HDFC Arbitrage Fund through SIP for the past 5 years today you would have around Rs 7.36 lakhs.

How HDFC Arbitrage Fund will perform in the future?

Needless to say no one can predict the future of markets. We have firm belief in the future prospects of the Indian economy. If the Indian economy grows at 9% then the leading companies tend to do well. When the companies do well their stock prices follows their performance. So if you expect the economy to grow at 8% then you can expect top performing mutual funds to give you returns in excess of 14%.

Mutual fund schemes that have exposure to mid-size companies tend to show results when their bet on few companies comes true. We advise you to avoid too much of star gazing and future prediction. Be reminded that equities are one of the asset classes that have the potential to beat inflation. Your aim for core portfolio should be to beat inflation.

When to review the performance?

Once you invest in the fund do not get into the habit of checking the NAV daily or monthly. Review the performance once a year. Too much attention is not good.

What charges apply?

A onetime fee of Rs 100 is charged on investments over Rs 10, 000 made through distributors. If you are a first time investor in mutual funds an additional Rs 50 is charged to cover KYC expenses. This is deducted from your investment and can be skipped if you buy directly from the mutual fund via their website or offices.

If units are sold within 180 days an exit load of 0.5% is deducted from your total returns. No exit load applies for units withdrawn thereafter. Expense ratio of HDFC Arbitrage Fund is 0.9%. This is charged to recover the fund management company’s expenses on securities’ transactions, commissions, registrar fees, etc. Your mutual fund returns will be total returns less expense ratio.

When to exit?

Withdraw when your goals are close to achievement. Do not remove the money when the markets go up or down. Do not panic. Stick to your goals.

What are the tax implications?

The returns in a mutual fund are absolutely tax free, provided you did not withdraw within 1 year. 

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