If you want stable returns with low risk, HDFC Mutual Fund has launched a new scheme called HDFC Income Plus Arbitrage Omni Fund of Funds (FOF). This is an open-ended fund that invests in a mix of arbitrage and debt funds.
The fund is open for subscription from February 27 to March 11. Its key feature is dynamic asset allocation — the fund will change its investment mix based on market conditions such as interest-rate trends, RBI policy, yield-curve changes, market liquidity,
and the gap between cash and futures markets. The goal is to deliver the best possible returns in different market situations.
Where Will the Money Be Invested?
The fund will follow a defined allocation strategy:
Minimum 65% in debt funds, debt securities, and money-market instruments
At least 35% in arbitrage schemes
This combination aims to balance stability (debt) with low-risk opportunities (arbitrage).
Tax Benefits and Structure
This scheme is a Fund of Funds (FOF), meaning it invests in other mutual fund schemes rather than directly in stocks or bonds.
When the fund manager shifts money between underlying schemes, investors do not pay capital-gains tax
Tax applies only when investors redeem or withdraw their units, as per mutual-fund taxation rules
Purpose and Investment Strategy
According to Navneet Munot, MD and CEO of HDFC Asset Management Company, the fund is designed to generate income while keeping risk balanced.
By combining arbitrage and debt, it aims to provide stable returns across market cycles.
Fund manager Praveen Jain noted that:
Inflation in the fixed-income market is under control
Liquidity is comfortable
The spread between low-rated and high-rated corporate bonds is higher than usual
These conditions may create attractive investment opportunities for the fund.
Benchmark of the Fund
The fund’s performance will be measured against a blended benchmark:
40% Nifty 50 Arbitrage Index
60% Nifty Short Duration Debt Index
Minimum Investment and Exit Load
Minimum investment: ₹100 (during NFO and later)
Maximum limit: No upper limit
Exit load: 1% if units are redeemed or switched within 18 months
After 18 months: No exit load
