Ideal for parking surplus cash between 6 and 12 months. For investors in the high tax bracket
This model portfolio of arbitrage funds comprises funds that generate returns through two core strategies: capturing price differentials between the cash and futures markets, and allocating to debt and money market instruments. This hybrid approach aims to deliver relatively stable returns with low volatility. The portfolio aims to deliver stable tax adjusted returns higher than bank deposits with similar maturity.
Our fund-selection methodology is based on a data-driven model using a multi-factor approach to identify funds that offer consistency, low risk and efficient liquidity management.
The strategy will continuously monitor these funds and recommend changes if the relative risk outlook, compared with other mutual funds in the same category, shifts materially. Adjustments may also be made if changes in fund management style, investment policy, or fund manager introduce uncertainty.
Invest in this portfolio of high-quality arbitrage funds to provide stability, liquidity and a reliable solution for short term cash management needs over a 6 to 12 month horizon.
This portfolio is suitable for investors in tax brackets of 25% and above, as the arbitrage funds are taxed like equity with STCG taxed at 20% and LTCG taxed at 12.5%. Thus, investors in higher tax brackets can earn significantly better tax adjusted returns vs investing in FDs or other debt funds which are taxed at your marginal tax rate. For investors in the tax bracket of < 25%, we recommend this portfolio.
