Can arbitrage funds give negative returns?
Arbitrage funds have an exit load of 1-6 months. Remember, widening of the spread differential can lead to arbit-rage funds delivering negative returns for very short periods. Also, assess fixed-income portion of such funds in respect of underlying credit and duration risk.
How safe is arbitrage fund?
Arbitrage funds make profits from low-risk buy-and-sell opportunities in the cash and futures market. Their risk level is comparable with that of a pure debt fund. Several arbitrage funds follow Crisil BSE 0.23\% Liquid Fund Index as their benchmark.
Can you lose capital in mutual funds?
With mutual funds, you may lose some or all of the money you invest because the securities held by a fund can go down in value. Dividends or interest payments may also change as market conditions change.
Why arbitrage mutual funds are becoming attractive?
Arbitrage funds also invest part of their capital into debt securities, which are typically considered highly stable. If there is a shortage of profitable arbitrage trades, funds invest more heavily in debt. That makes this type of fund very appealing to investors with a low tolerance for risk.
Can you lose money in arbitrage?
Arbitrage funds may also profit from trading stocks on different exchanges. They could be bought on one stock exchange at a certain price and sold on another exchange at a higher price. Equities are more volatile than most asset classes with even the possibility of a capital loss over the short-term.
Can mutual funds collapse?
Can you lose money in mutual funds in falling markets? Yes. Certain investors believe they can take their money out of a mutual fund when its value goes down and then invest again when the value starts climbing up again. This sounds good in theory but usually does not turn out well.
Can you become rich with mutual funds?
The Power Of Compounding For Wealth Creation The 15*15*15 rule can help an investor generate wealth using compounding. It suggests that if you invest a sum of ₹15,000 per month via SIP in a fund that gives 15\% returns for 15 years, you can generate revenue up to ₹1 Cr.
Which is better liquid fund or arbitrage fund?
Liquid funds are much safer in comparison to arbitrage funds, as it invests mainly in debt-related instruments. While arbitrage funds are riskier as the investment returns are dependent on the market volatility. The fund managers get ample arbitrage opportunities during a bullish market.