Objectives of Tata Income Plus Arbitrage Active FOF

To provide long-term capital appreciation by investing in domestic mutual funds including debt oriented mutual fund schemes & arbitrage-based equity mutual fund schemes. However, there is no assurance or guarantee that the investment objective of the Tata Income Plus Arbitrage Active FOF – Dir (G) – NFO will be achieved.

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Key Features of Tata Income Plus Arbitrage Active FOF

• Scheme Name: Tata Income Plus Arbitrage Active FOF
• Type: Open-Ended
• Category: Other Scheme – FoF (Domestic)
• Objective: Long-term capital appreciation via debt & arbitrage-based equity mutual fund schemes
• NFO Launch Date: 5th May 2025
• NFO Closure Date: 19th May 2025

Investment Strategy of Tata Income Plus Arbitrage Active FOF

• Blends the stability of high-quality corporate bonds with the low-risk arbitrage strategy.
• Allocates up to 65% to Tata Corporate Bond Fund for steady accrual returns.
• Invests at least 35% in Tata Arbitrage Fund to benefit from short-term, low-volatility equity arbitrage opportunities.
• Designed for investors with a 2-year investment horizon seeking tax-efficient returns.
• Utilizes selective duration management in debt to enhance returns while controlling interest rate risk.
• Aims to outperform traditional debt funds through hybrid structure and active fund allocation.

Risks Associated with Tata Income Plus Arbitrage Active FOF

• Interest rate risk from the bond portion if rates rise sharply.
• Arbitrage inefficiencies may lead to lower returns during low market volatility.
• Liquidity risks if redemptions surge or underlying funds face challenges.
• Fund of Fund structure adds a layer of expense and potential tracking delays.

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Risk Mitigation Strategy by Tata Income Plus Arbitrage Active FOF

The fund adopts a dual-layer risk mitigation approach by blending two inherently stable strategies. The arbitrage component is backed by a fully hedged equity portfolio, ensuring limited exposure to market volatility. On the other hand, the corporate bond allocation targets accrual-based income with selective duration management to reduce interest rate sensitivity. This combination, under a Fund of Fund structure, provides both diversification and operational flexibility. Additionally, the fund’s modest exit load discourages short-term withdrawals and supports liquidity planning. The active allocation allows the fund manager to optimize risk-reward based on prevailing market dynamics.

Benefits of Investing in Tata Income Plus Arbitrage Active FOF

• Offers a unique hybrid strategy blending accrual income and arbitrage returns.
• Suitable for low-risk investors aiming to avoid volatility yet earn stable returns.
• Better post-tax returns when held for 2+ years, benefiting from equity taxation.
• Tata Arbitrage Fund has a proven track record, among top 3 performers in its category.
• Debt portion managed by experienced team with 8.43% annualized return in past year.

What Type of Investor Should Invest in Tata Income Plus Arbitrage Active FOF?

• Investors with a low to moderate risk appetite looking for stability over short-to-medium term.
• Those seeking tax-efficient returns better than traditional debt options.
• Ideal for investors with a minimum 2-year horizon who want low volatility.
• Suitable for investors looking to diversify their portfolio through hybrid funds.
• Good for those seeking an alternative to fixed deposits or debt mutual funds with better post-tax benefits.
• Investors who prefer a systematic and professionally managed fund with a balanced strategy.