Nippon India Mutual Fund has introduced a new Income Plus Arbitrage Omni Fund of Fund, combining arbitrage strategies with debt investments to target steadier, tax-efficient returns for long-term investors amid evolving market dynamics.
Nippon India Mutual Fund has opened a new fund offer for its Income Plus Arbitrage Omni Fund of Fund, a hybrid structure that combines arbitrage strategies with debt investments in a single portfolio. The fund house says the product is designed to seek steadier risk-adjusted returns, lower volatility and greater tax efficiency for investors willing to stay invested for at least two years.
According to the fund house, the scheme will put most of its money into a mix of arbitrage mutual funds, active debt funds and passive debt funds, with a small portion of up to 5% allowed in debt and money market instruments. It will keep at least 35% in arbitrage funds, while the combined exposure to active debt, passive debt and money market holdings will remain below 65% at all times.
That tax treatment is central to the pitch. Because the fund is structured to stay below the 65% threshold in debt-like assets, gains held for more than 24 months are taxed at 12.5% as long-term capital gains, while shorter holding periods are taxed at the investor’s applicable slab rate. Nippon India Mutual Fund says this lets investors tap several underlying strategies without moving between schemes themselves or triggering the tax consequences of switching.
The fund house says the product may suit investors with a low tolerance for interest-rate swings who want accrual-style returns and a holding period of two to three years. The offer closes on August 31. The launch comes after other fund houses, including HDFC Mutual Fund and Nippon India itself, have added similar income-plus-arbitrage structures to meet demand for relatively conservative hybrid options.
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