Coronavirus impact: Not enough arbitrage left in the market, say arbitrage funds
- Arbitrage funds, despite their debt-like returns, are treated as equity funds for tax purposes
- Over the past year, average return of arbitrage funds had stood at 5.92%. Over the past week, this fell to -0.09%
Tata Mutual Fund, on 19 March, shuttered itself to fresh inflows in its Arbitrage Fund citing the need to protect investors from volatility. ICICI Prudential Mutual Fund followed suit on 20 March, refusing fresh inflows between 21st and 31st March. Broadly, notes put out by asset management companies (AMCs) said the moves were on account of a drastic fall in arbitrage opportunities in the market due to the overall selling pressure.
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