Arbitrage mutual fund

Tue, 12 May 2026 00:00:00 +0000

An arbitrage mutual fund in India is an open-ended hybrid scheme that generates returns primarily by exploiting the price difference between the cash (spot) market and the futures market for the same equity security. The strategy involves simultaneously buying a stock in the cash market and selling an equivalent futures contract on the same stock at a higher price (the futures premium). The spread between the cash price and the futures price, captured at the time of trade, represents a near risk-free return that is crystallised when the futures contract expires and the prices converge.

Cash-Futures Spread on WebNotes

Arbitrage mutual fund