“In the current environment where debt yields are attractive and volatility in equity market persists, a hybrid strategy like this can potentially offer superior post-tax returns compared to traditional debt funds,” said Sailesh Jain, Fund Manager, Tata Asset Management. “The fund’s active allocation and smart liquidity management aim at optimising returns.”
The Tata Income Plus Arbitrage Active FoF is designed for investors with a two-year horizon, seeking potentially stable, accrual-oriented and tax-efficient returns. The fund allocates maximum of 65% to Tata Corporate Bond Fund and minimum of 35% to Tata Arbitrage Fund, combining the stability of debt with tax efficient returns when a horizon of 2 years is considered.
The Tata Arbitrage Fund, with its 100% hedged equity portfolio, aims for short-term stable gains, while the Tata Corporate Bond fund focusses on accrual returns with selective duration management. This blend wrapped under a ‘Fund of Fund’ structure, offers a balanced approach with better tax efficiency than standalone arbitrage or corporate bond funds when held for over two years.