Arbitrage schemes are back on investors’ radar, with the category garnering net inflows of Rs 6,587 crore in April. Investors have been looking for alternatives to debt schemes, following Fanklin’s winding up of six of its credit-oriented debt schemes.
“In March, the category had outflows due to temporary dislocation between cash and futures markets and investors taking out money for their year-end liquidity needs. But with markets stabilising, investors are looking at the category as an alternative to park funds in and avoid categories with credit or other debt market-related risks,” said Radhika Gupta, chief executive officer at Edelweiss Mutual Fund (MF).
The arbitrage category had net outflows of Rs 33,767 crore in March, as heightened volatility caused stock prices in futures market to trade at discount to spot prices.
As a result, the spreads for such schemes shrunk, impacting the returns.