Hybrid Fund Categories
Arbitrage Funds
Low-risk equity-taxed funds exploiting cash–futures price gaps.
Updated 27 September 2026 · SEBI rules as of 2026
SEBI mandate
≥ 65% arbitrage positions
Hybrid Fund CategoriesOverview
Arbitrage funds buy in the cash market and sell in futures to capture price differences. Returns are close to liquid funds, but taxed as equity (≥ 65% equity via arbitrage).
| Particular | Details |
|---|---|
| SEBI mandate | ≥ 65% arbitrage positions |
| Tax treatment | Equity taxation |
| Suited for | 3–12 month parking for higher tax-slab investors |
What to check
| Parameter | Why |
|---|---|
| Equity range | Actual equity exposure over time |
| Debt quality | Credit profile of debt portion |
| Drawdowns | Fall during market corrections |
| Expense ratio | Direct vs regular |
| Rebalancing | Automatic asset allocation benefit |
Plan your investment
Frequently asked questions
Are hybrid funds safer than equity funds?
Usually less volatile, but they still carry market risk in the equity portion.
Mutual fund investments are subject to market risks; read all scheme-related documents carefully. Information is educational and may change with SEBI / tax rules — verify with the AMC, AMFI or SEBI. FinancePortal is not an investment adviser.