NFO Alert: WhiteOak Capital Mutual Fund launches arbitrage fund

WhiteOak Capital Mutual Fund has announced the launch of the WhiteOak Capital Arbitrage Fund, an open-ended scheme focused on arbitrage opportunities.The new fund offer (NFO) will open for subscription on August 28 and close on September 3.

The fund aims to generate returns primarily by investing in arbitrage opportunities within the equity markets' cash and derivatives segments, with any remaining funds allocated to debt and money market instruments.

Under normal circumstances, the fund will allocate 65-100% of its assets to equity and equity-related instruments, including equity derivatives. It will allocate 0-35% to debt securities and money market instruments, which include margin money deployed in derivative transactions.


Additionally, 0-10% of the fund may be invested in units issued by REITs and InvITs.

Under defensive circumstances, the fund will allocate 0-65% of its assets to equity and equity-related instruments, including equity derivatives. It will allocate 35-100% to debt securities and money market instruments, which include margin money deployed in derivative transactions. Additionally, 0-10% of the fund may be invested in units issued by REITs and InvITs.

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If suitable arbitrage opportunities are not available, the investment manager may hedge the equity portfolio using derivatives or invest in short-term debt and money market instruments.

The scheme will offer regular and direct plans both with growth options only. The minimum investment amount for lumpsum purchase will be Rs 500 and in multiples of Re 1 thereafter. For weekly, fortnightly, and monthly SIP frequency, the minimum investment amount will be Rs 100 with a minimum of six installments.

In respect of each purchase/switch-in of units, an exit load of 0.25% is payable if units are redeemed/switched out within seven days from the date of allotment.

No exit load is payable if units are redeemed/switched out after seven days from the date of allotment.
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The scheme will be benchmarked against the Nifty 50 Arbitrage TRI and will be managed by Ramesh Mantri, Ashish Agrawal (equity investments), and Piyush Baranwal (debt investments).

The scheme is suitable for investors seeking short- to medium-term returns through investments primarily in arbitrage opportunities within the cash and derivatives segments of the equity market. It carries a “low” risk according to the scheme’s riskometer.

Investors in higher tax brackets may find the scheme attractive, as it is classified as an equity-oriented fund for tax purposes. Long-Term Capital Gains (LTCG) tax of 12.5% applies to gains exceeding Rs 1.25 lakh in a financial year, according to the fund house's release.