The fund is overseen by Devang Shah (Head of Fixed Income), along with Aditya Pagaria (Senior Fund Manager), Hardik Satra (Senior Fund Manager), and Karthik Kumar (Fund Manager).
According to the Axis press release, this new offering is designed for investors looking to optimise their post-tax returns while maintaining a conservative risk profile. The fund carefully combines investments in passive debt-oriented mutual fund schemes with arbitrage funds, forming a hybrid structure that aims to provide steady returns over a medium-term horizon.
B. Gopkumar, MD & CEO, Axis AMC, said, “At Axis Mutual Fund, our focus has always been on delivering innovative, investor-centric solutions that combine performance with simplicity. The Axis Income Plus Arbitrage Passive FOF is a testament to this philosophy—offering a unique blend of stability, transparency, and tax efficiency. In a market where predictability and post-tax returns matter more than ever, this fund is designed to empower investors with a smarter way to approach fixed income investing.”
The scheme is designed to allocate about 50–65% of its portfolio to passive, debt-focused mutual fund schemes that invest in high-quality instruments. According to the press release, “The underlying schemes would follow a roll-down strategy, which allows investors to benefit from accrual income while minimising interest rate risk. The remaining 35–50% of the portfolio is allocated to arbitrage funds that hold fully hedged equity positions. This component is intended to generate returns with minimal volatility by avoiding broad market exposure. The combination of these two parts ensures that the fund delivers debt-like returns with improved tax efficiency.”
The scheme is benchmarked against a composite index comprising 65% NIFTY Short Duration Debt Index and 35% Nifty 50 Arbitrage TRI, reflecting its dual exposure. The fund offers high liquidity with T+2 redemption payouts and no exit load, making it a flexible option for investors. Additionally, the fund’s structure ensures no tax liability on rebalancing of the underlying schemes, further enhancing its efficiency.
This fund is ideally suited for corporations, high-net-worth individuals (HNIs), and retail investors seeking a low- to moderate-risk investment that aims to provide relatively stable returns over a medium-term horizon. The use of passive roll-down strategies in the debt component offers visibility into returns at maturity. Meanwhile, the arbitrage allocation adds a layer of return enhancement with minimal additional risk, according to the press release.
One of the main reasons to invest in this fund is its tax efficiency. Unlike traditional debt mutual funds or fixed deposits, which are taxed at the investor’s slab rate, the Axis Income Plus Arbitrage Passive FOF qualifies for long-term capital gains (LTCG) taxation at just 12.5% if held for more than 24 months.
“With the current market environment offering attractive accrual opportunities and investors increasingly seeking tax-efficient alternatives to traditional fixed income products, the Axis Income Plus Arbitrage Passive FOF can be a timely solution,” said Ashish Gupta, CIO of Axis AMC. “By leveraging passive roll-down strategies and fully hedged arbitrage exposure, the fund is designed to offer a predictable and transparent investment experience.”
Moreover, the fund addresses key investor concerns—often called the “5Ps”: Problem of Plenty, Predictability, Portfolio transparency, Post-tax returns, and Protection from credit events. By focusing on a high-quality portfolio, the fund seeks to minimise credit risk. Its passive structure promotes transparency and predictability, while the hybrid allocation model provides diversification and resilience across market cycles, according to the press release.