The Hindu Business Line : SBI Mutual Fund plans arbitrage fund scheme

SBI Mutual Fund has proposed an open-end interval equity scheme that will try to provide capital appreciation and regular income by identifying arbitrage opportunities between the spot and derivative market segments.

The proposed SBI Arbitrage Opportunities Fund, which will also invest in debt and money market instruments, has described the interval period for redemption and switch over as the settlement Thursday (the settlement day for derivatives segment in the NSE which is currently last Thursday of the month) or any other day which is declared as the settlement day.

Mr Nitin Jain and Mr Killol Pandya have been named as the fund managers. The proposed scheme will have Crisil's liquid fund index as its benchmark.

Under normal circumstances, exposure to equities and equity-related instruments may be in the 51-85 per cent range, with a similar range for allocation to derivatives. The fund may investment up to 49 per cent in debt and money market instruments, the minimum being 15 per cent.

Securitised debt will not account for more than 10 per cent in the overall exposure to debt.

In cases where gainful arbitrage opportunities do not exist, the scheme may hold its assets in debt and money market instruments till reasonable arbitrage is possible, the offer document filed with SEBI has indicated, adding that repurchase facility will be provided on specified interval dates.

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