Gainful short-term investment strategy- Arbitarge Funds the best.

There are certain categories of  investors who would not like to invest on  a medium or long term basis. Som would like to park funds on short term basis. People selling their fixed assets like house, factories or even retired people with some huge funds would not be able to plan for investment immediately. Some may have commitments like marriage in their family, overseas education, foreign trips, medical expenses and so on. Such kind of  people would be in a real dilemma  as to where to park funds. The Bank interest rate is abysmally very low and compared to the inflation, it is negative return, in reality.

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Under such circumstances, it is prudent to think of ways and means to gainfully invest the money on a short term basis so that the real value of it is not eroded.  Herein comes the “Arbitrage Funds” in MF category. What is this fund all about? Arbitrage fund generates returns based on the price differential in the cash and futures market. The Fund manager simultaneously  buys  a company share in Equity/cash  market and sells an equivalent quantity in the futures segement thereby generating a return for the scheme. Here there is no naked or plain exposure  to any individual security  or an index as each “buy” transaction in the cash market  has a corresponding sell  transaction in  F & O  segment.

As per the regulations, 65 % of the corpus  of the scheme is  allocated to arbitrage products. And the Fund Manager is free to allocate the balance 35 %  between arbitrage or debt products, depending upon the market conditions. There are people who  park their chunk of funds for a period of say 3 to 6  months for various reasons as stated above. It is also beneficial from the tax point of view. 20 % capital gains tax for a period less than one year and 12.5 % on LTCG.

Arbitrage funds rank high on safety as  the scheme has always a market neutral position. Such funds have been giving on an average 6.55 % p.a returns.

Please take advantage of this strategic investment tool for short term investments through Goodwill Wealth Management P Ltd. You may also be interested in their exciting plan of investment in Power stocks.