Investors recommended to consider arbitrage funds in March

Arbitrage mutual funds are a type of investment that can be appealing for those looking to park their money for a year or more. These funds take advantage of price differences between cash and derivatives markets to generate returns. They are taxed similarly to equity mutual funds, offering a 12.5% long-term capital gains tax for investments held over a year. Short-term investments face a 20% tax. Market volatility can benefit arbitrage funds by creating more opportunities. However, periods with fewer arbitrage opportunities may occur when markets trend in one direction. This makes arbitrage funds suitable for investors who want to avoid making decisions based on interest rate changes. For March 2025, two recommended arbitrage funds are the Kotak Equity Arbitrage Fund and the Nippon India Arbitrage Fund. These funds were selected based on performance factors like mean rolling returns and consistency over the last three years. Investors should remember that past performance is not an indicator of future results. Regular monitoring of investment schemes is advised to ensure they meet financial goals.