Arbitrage Funds

Arbitrage funds aim to profit from price differences in various markets. They take advantage of the gaps between buying and selling prices of assets, seeking to capitalise on such fluctuations for gains.

Best Arbitrage Funds Sorted by Last 3 Year Returns

About Arbitrage Mutual Funds

Value mutual funds are a type of equity fund built around the value investing strategy. As per SEBI regulations, these funds must invest at least 65% of their total assets in equity and equity-related instruments. The primary aim of value mutual funds is to identify and invest in stocks that are trading at prices lower than their intrinsic value. These stocks, known as value stocks, offer the potential for long-term capital appreciation.

The philosophy of value investing was introduced by Benjamin Graham in his renowned book, The Intelligent Investor. The idea is to find high-quality businesses that are temporarily undervalued by the market. The assumption is that the market will eventually recognize the true worth of these companies, leading to a significant price correction in the investor’s favor.

How Do Value Funds Work?

Value mutual funds function by employing in-depth research to identify fundamentally strong companies whose stocks are currently undervalued. Fund managers look into a company's balance sheet, revenue model, competitive positioning, and long-term earnings potential before making investment decisions. Once such stocks are identified, the fund invests with a long-term horizon, waiting for the market to correct the undervaluation over time.

These funds may underperform during bullish market cycles when growth stocks lead the rally, but they often outperform during market corrections or long-term holding periods due to their strong fundamental base.

Features of Value Mutual Funds

• Extensive Research: Requires in-depth fundamental analysis and evaluation of intrinsic value.
• Long-Term Focus: Ideal for patient investors looking for wealth creation over time.
• Risk-Reward Balance: Potentially lower downside risk due to undervaluation, but not immune to market volatility.
• Diversified Portfolio: Can span multiple sectors and industries, providing a balanced approach to equity investing.
• Contrarian Strategy: Often involves investing in stocks that are currently out of favor with the market.