Arbitrage Surge! quant Mutual Fund Launches New Hybrid FoF to Capture Debt and Derivatives Gains

Arbitrage Surge! quant Mutual Fund Launches New Hybrid FoF to Capture Debt and Derivatives Gains​

quant Money Managers Limited has introduced a specialized investment vehicle: the quant Income Plus Arbitrage Active FoF. This new open-ended Fund of Fund (FoF) scheme is designed for investors seeking long-term capital appreciation and stable income by targeting investments in Arbitrage and actively managed Debt Mutual Fund Schemes.

This launch marks the first Hybrid FoF product from quant Mutual Fund, aiming to combine the stability of debt exposure with the opportunities presented in arbitrage strategies. The scheme offers units at NAV-based prices on all business days, allowing continuous investment access.

Investment Mandate and Allocation Strategy​

The primary objective of the quant Income Plus Arbitrage Active FoF is generating income and achieving long-term capital appreciation. The portfolio construction strategy emphasizes a flexible approach, continuously evaluating market conditions such as interest rate outlook and available arbitrage spreads between the cash market and the Future & Options (F&O) market.

Under normal circumstances, the fund allocates assets primarily to units of Arbitrage Fund and actively managed Debt schemes (95% to 100%). The mandate includes investments in debt securities and money market instruments, with a maximum exposure limit set at 5%.

The scheme's performance is benchmarked against a composite index structure: 40% NIFTY 50 Arbitrage Index (TRI) and 60% NIFTY Composite Debt Index. This dual-focused benchmark ensures the fund remains aligned with its intended hybrid strategy.

Comprehensive Risk Assessment and Compliance​

As a FoF scheme, investors must be aware that the performance of this product is inherently linked to the underlying schemes in which it invests. The risk assessment assigned to the Scheme reflects the nature of its components—a high-risk profile necessary for harnessing advanced market opportunities.

Specific risks are outlined pertaining to arbitrage and debt instruments. Arbitrage funds, while seeking discrepancies between cash and derivative markets, face scenarios where price spreads are insufficient to meet the cost of carry. Debt investment carries standard risks including credit risk, prepayment risk, and reinvestment risk.

Furthermore, the scheme limits investments in unlisted securities and prohibits actions like short selling or corporate debt repo, maintaining a focus on regulated and defined financial instruments. The AMC has provided full assurance that all disclosures conform strictly to SEBI (Mutual Funds) Regulations, 2026.

Offering Details and Operational Mechanics​

The fund is being offered during its New Fund Offer (NFO). During this period, the price per unit set for investment is Rs. 10/-. The minimum application amount required during the NFO period is Rs. 5,000/-, with additional purchase amounts starting at Rs. 1,000/-.

The scheme maintains a transparent load structure; crucially, there is no Exit Load levied on units currently. The management of this fund involves specialized professionals, including Mr. Sanjeev Sharma and Mr. Sameer Kate, who bring extensive experience in equity and derivatives trading to the investment team.

Expense Structure and Transaction Procedures​

The scheme details a comprehensive Total Expense Ratio (TER) structure, which covers Investment Management and Advisory fees, audit costs, and marketing expenses. The maximum base expense ratio (BER) is capped at Upto 1.85% of daily net assets.

Transaction procedures are strictly defined. For instance, the applicable closing NAV for redemption applications must be received up to 3:00 p.m. on a business day. The fund also provides robust investor protections, including the right to restrict or suspend redemptions in cases of systemic market liquidity issues, ensuring stability for unit holders.