&w=3840&q=100)
Looking for low-risk returns? SBI's new fund mixes debt and arbitrage
SBI Mutual Fund, India's largest asset management company, on Tuesday launched a new hybrid investment vehicle — the SBI Income Plus Arbitrage Active Fund of Fund (FOF). The New Fund Offer (NFO) opens on April 23, 2025, and closes on April 30, 2025.
This open-ended scheme offers investors a blend of actively managed debt schemes and arbitrage mutual fund schemes, aiming to provide regular income with capital appreciation — all with a layer of tax efficiency. However, there is no assurance or guarantee that the investment objective of the Scheme would be achieved.
The objective of the SBI Income Plus Arbitrage Active FOF is to deliver stable, tax-efficient returns by dynamically allocating funds between:
Actively managed debt-oriented mutual fund schemes (50–65% of portfolio)
Actively managed arbitrage mutual fund schemes (35–50% of portfolio)
Cash or money market instruments (up to 5%)
Benchmark: 65% Nifty Composite Debt Index + 35% Nifty 50 Arbitrage Index
Structure: Fund of Fund – invests in existing SBI Mutual Fund schemes or those of other AMCs
Also Read
"In today's market environment, stability and tax-efficiency matter. The SBI Income Plus Arbitrage Fund of Fund aims to allocate investments between debt-oriented and arbitrage mutual fund schemes, depending on market conditions, to provide a combination of stability from debt and market-neutral returns from arbitrage. The scheme offers a suitable tax efficient option for conservative investors, HNIs, corporates managing treasuries, and anyone looking for optimal post-tax returns over a 2–3-year horizon," said D P Singh, Deputy MD & Joint CEO, SBI Funds Management Limited.
The scheme would primarily invest between 35% and 50% of its assets in Units of actively managed Arbitrage Mutual Fund schemes, invest a minimum of 50% and a maximum of 65% of its assets in Units of actively managed debt-oriented schemes, and up to 5% in Money market instruments, Triparty Repo, reverse Repo, cash and cash equivalents.
The minimum application amount required is of Rs. 5,000 and in multiples of Re. 1 thereafter with additional investment of Rs. 1,000 and in multiples of Re. 1 thereafter.
Investments can also be done through daily, weekly, monthly, quarterly, semi-annual, and annual SIP (Systematic Investment Plan).
The fund manager for the SBI Income Plus Arbitrage Active Fund of Funds is Ardhendu Bhattacharya, who has been with the fund house since April 2019. He currently manages the debt portion of several funds, including the SBI Retirement Benefit Fund - Aggressive Plan, SBI Retirement Benefit Fund - Aggressive Hybrid Plan, SBI Retirement Benefit Fund - Conservative Hybrid Plan, SBI Retirement Benefit Fund - Conservative Plan, SBI Floating Rate Debt Fund, and SBI Arbitrage Opportunities Fund. Additionally, he is the co-Fund Manager of the SBI Corporate Bond Fund, SBI Banking & PSU Fund, SBI Magnum Ultra Short Duration Fund, and SBI-ETF 10 Year Gilt.
Who should consider this fund?
This fund may be a suitable fit for:
Conservative investors seeking stable returns
High-net-worth individuals (HNIs) looking for tax-advantaged income
Corporate treasuries managing cash with a balanced risk appetite
Investors with a 2–3 year investment horizon
Investment Details
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Mint
3 days ago
- Mint
NFO alert: Motilal Oswal BSE 1000 Index Fund launched — here's all you need to know
Motilal Oswal Mutual Fund has announced the launch of 'Motilal Oswal BSE 1000 Index Fund', an open-ended fund that tracks the BSE 1000 Total Return Index. Notably, this is the first fund to replicate the BSE 1000 Total Return Index, which covers approximately 94 per cent of the country's listed market capitalisation. It offers investors a wide equity market representation within a single index, the company said in a press release. According to the company, the new fund offer ( NFO) will open for subscription from June 5 to June 19, 2025. Investors can put in a minimum lump sum amount of ₹ 500, with subsequent multiples of ₹ 1. The company also mentioned that an exit load of 1 per cent will be applicable if the investment is redeemed within 15 days of allotment. No exit load will be charged after this period. The NFO is suitable for investors who are seeking long-term capital growth and return that corresponds to the BSE 1000 Total Return Index, although its performance may vary due to tracking error, the company said. The Motilal Oswal BSE 1000 Index Fund includes companies across large, mid, small, and micro-cap segments, representing diverse sectors and industries - from traditional industries to cutting-edge technology. This index provides a blend of established companies and emerging companies across 22 sectors, reducing dependence on a few large stocks. To minimise risk, the top 10 stocks are capped at around 33 per cent of the total weightage. 'It offers exposure to a mix of established market leaders and emerging companies across 22 sectors, with the top-10 stock weight capped at ~33%, thereby helping to reduce concentration risk. The index also includes micro-cap companies, whose market capitalisation and liquidity have grown approximately 5× and 14× respectively over the past five years. All within a passive, free-float weighted structure with semi-annual rebalancing,' the company said in the statement. Delving into the asset allocation of the fund and associated risks, Pratik Oswal, Head of Passive Funds at Motilal Oswal, said BSE 1000 TRI is primarily a large and mid-cap index, which makes it 'relatively less risky'. 'Approximately 75 to 80 per cent of the index will be large and mid-cap. 60 per cent is large cap. So relatively, it's not a very risky fund. But, however, it's a 100 per cent equity fund,' Oswal said, adding that this fund will benefit investors who are looking at a long-term approach to investing. 'An investor should not look at it from a one or two-year perspective. It should be a minimum five-year perspective. That's important when you look at these sorts of funds.' He also mentioned that investors who are concerned about the returns getting diluted due to the over-diversification in the fund should note that this fund follows the 'Darwinism' approach in the stock market. 'If a stock is performing well in the current market, its weightage in the fund increases and if the opposite happens, the weightage of the fund will automatically go down.'
&w=3840&q=100)
Business Standard
3 days ago
- Business Standard
India's first BSE 1000 Index Fund is here: Invest in 1,000 cos with Rs 500
Motilal Oswal Mutual Fund (MOMF) on Thursday launched India's first-ever index fund tracking the BSE 1000 Total Return Index, providing investors with a unique opportunity to access a diversified portfolio of the top 1,000 listed companies across large, mid, small, and micro-cap segments. The fund opened for subscription on 5 June under a New Fund Offer (NFO) that will run until June 19, 2025. What is the Motilal Oswal BSE 1000 Index Fund? This new fund passively replicates the BSE 1000 Total Return Index, which covers about 94% of India's listed market capitalization, making it one of the most inclusive equity benchmarks in the country. It spans 22 sectors, offering investors exposure to both industry leaders and high-growth emerging businesses. It offers exposure to a mix of established market leaders and emerging companies across 22 sectors, with the top-10 stock weight capped at 33%, thereby helping to reduce concentration risk. The index also includes micro-cap companies, whose market capitalization and liquidity have grown approximately 5× and 14× respectively over the past five years. All within a passive, free-float weighted structure with semi-annual rebalancing. NFO Period: June 5, 2025 to June 19, 2025 Investment Objective: The investment objective of the scheme is to provide returns that, before expenses, correspond to the total returns of the securities as represented by BSE 1000, subject to tracking error. However, there can be no assurance or guarantee that the investment objectives of the scheme will be achieved. Benchmark: BSE 1000 Total Return Index Investor Profile: This product is suitable for investors who are seeking long-term capital growth and return that corresponds to the BSE 1000 Total Return Index, subject to tracking error. Minimum application: During the NFO and ongoing Bases: For Lump sum: ₹ 500 and multiples of ₹ 1 thereafter. For the Systematic Investment Plan (SIP), the minimum instalment amount, frequency, number of instalments, and choice of SIP date/day are different and as specified in the Scheme Information Document. 1 % - If redeemed on or before 15 days from the allotment. Nil - thereafter. Why this fund matters: Broad Diversification: Covers companies across all market caps and sectors Reduced Concentration Risk: Top 10 stocks capped at ~33% Passive & Cost-Effective: Semi-annual rebalancing, no active stock picking Aligned with India's Growth: Reflects economic trends in infrastructure, manufacturing, tech, and more According to MOAMCs internal research, India is expected to continue on a strong growth trajectory, supported by strong fundamentals, supportive policies, and robust domestic demand. The International Monetary Fund ('IMF') projects India's GDP growth at 6.2% in 2025 and 6.3% in 2026 economies. "This growth is aligned with India's 'Viksit Bharat 2047' vision, which aims to transform the country into a fully developed, high-income nation by 2047, with a targeted GDP of $23–$35 trillion and per capita income of $15,000–$20,000. As India progresses in areas like technology, manufacturing, energy, and infrastructure, opportunities are likely to arise across multiple sectors. A diversified portfolio like the BSE 1000, encompassing a wide range of listed companies, offers investors a structured way to participate in this evolving growth landscape," Motilal Oswal said in a statement. Who Should invest? This fund is ideal for: Long-term investors seeking capital growth Those looking for passive, diversified exposure to India's equity markets Investors wanting to ride India's transformation journey towards Viksit Bharat 2047 'We are proud to launch India's first index fund tracking the BSE 1000 Total Return Index, giving investors access to India's largest and most inclusive equity index. This fund aims to captures the performance of 1,000 companies spanning large, mid, small, and micro-cap companies across 22 sectors. It provides a diversified exposure to India's corporate sector and is a natural evolution for investors seeking a passive investment option," said Pratik Oswal, Chief of– Passive Business, Motilal Oswal Asset Management Company ('MOAMC'): The Motilal Oswal BSE 1000 Index Fund offers a low-cost, diversified gateway into India's equity markets for those seeking to invest in the country's long-term growth story—from giants to up-and-comers, all in one basket. Mutual Fund investments are subject to market risks, read all scheme-related documents carefully before investing. Past performance is not indicative of future returns. Please consult your financial advisor before making any investment decisions.
Mint
4 days ago
- Mint
Why Freefincal's Pattabiraman doesn't believe in beating the market
For M. Pattabiraman, retirement planning was never about chasing a magic corpus number or beating the market. Instead, it's been about staying consistent, keeping things simple, and sticking to what works. A professor at IIT Madras and the founder of personal finance platform Freefincal, Pattabiraman—affectionately known as 'Pattu Sir" in India's investing circles—achieved financial independence and early retirement (FIRE) at the age of 45. Since 2008, he has invested steadily through multiple market cycles, building a portfolio that delivered a 13.9% XIRR (extended internal rate of return)—without juggling multiple asset classes or experimenting with complex strategies. In this edition of Mint's 'Guru Portfolio' series, we speak to Mr Pattabiraman about how he built his retirement corpus, the mutual funds that stood the test of time, and why he believes that steadily increasing your investments matters more than hunting for outsized returns. Edited excerpts from the interview: How is your portfolio structured? My portfolio is structured with 65% in equities and 35% in fixed income—reflecting a long-term growth strategy I've followed since I began investing in June 2008. The goal has always been to create a balanced approach that can weather market volatility and steadily compound over time. This asset allocation has remained largely unchanged, with no major shifts in recent years. How has your portfolio performed? Since inception, my portfolio has delivered an XIRR of 13.90%—a return I'm quite content with, especially considering the long investment horizon and the market cycles I've navigated over the years. Nearly 60% of my portfolio is invested in equity mutual funds. In addition, I hold a small allocation—about 5.72%—in individual stocks, which form an experimental dividend-focused portfolio. I've not added fresh capital to this segment since October 2022. My National Pension System (NPS) contribution makes up just over 20% of the portfolio, with only 15% of it allocated to equities and the rest to government bonds. I don't intend to switch to the Unified Pension Scheme (UPS), as I don't expect to rely significantly on pension income after retirement. Around 10% of my portfolio is invested in debt mutual funds, while my Public Provident Fund (PPF) holdings account for 3.72%. I also maintain approximately 1.2% in cash equivalents—primarily through arbitrage and liquid funds. Which mutual funds do you invest in? Parag Parikh FlexiCap has been the standout performer in my portfolio with 20.75% XIRR. I've been invested in it since the new fund offer (NFO), and it now makes up over 58% of my mutual fund holdings. In hindsight, I was fortunate to get in early, and it has paid off. HDFC Hybrid Equity has been a core part of my portfolio since September 2011, followed by Quantum Long Term Equity, which I began investing in from February 2013. More recently, I added the UTI Low Volatility Fund during its NFO, and it has already started showing promising performance. On the debt side, I hold ICICI Gilt Fund, which I added during a portfolio rebalance in February 2021. I also invested in Parag Parikh's Conservative Hybrid Fund (CHF), but later switched to their Dynamic Asset Allocation Fund (DAF) for greater tax efficiency. Do you hold gold in your portfolio? I've never been interested in holding gold in my retirement portfolio. Gold is as volatile as equities and adds complexity to portfolio management. But, I do have some indirect exposure to gold through a multi-asset fund in my son's education portfolio—originally ICICI Dynamic, now rebranded as the Multi-Asset Fund. For investors looking to add gold to their portfolios, a multi-asset fund is a smart and convenient option, as rebalancing is taken care of by the fund manager. Do you have any global diversification in your portfolio? Very limited. I have some exposure through the Parag Parikh Flexicap Fund, which once had about 30% allocated to international equities. However, due to RBI restrictions and a rise in the fund's assets under management (AUM), that has now dropped to around 10%. Given that equity makes up 58% of my portfolio, my global exposure is quite small. Personally, I prefer simplicity. More diversification means more complexity in maintaining allocation and rebalancing. It's fine for investors who understand how to manage that—but I'd rather keep it straightforward. Do you use credit cards? Yes, mainly for international payments related to my website, like buying plugins, and also for emergencies. It gives me a few weeks of leeway before paying. But I don't use it for rewards or discounts. I believe you can't build wealth by spending. Reward points are incentives for spending, and that's not how wealth is created. What kind of life and health insurance do you have? I have a total life insurance cover of ₹1.2 crore, split between an employer-provided policy and a personal term plan. Since my investments are meant to handle future liabilities, I haven't seen the need to increase it. For health insurance, my family—my spouse, son, and I—are covered under United India's Family Medicare Plan. Each of us holds an individual base policy of ₹25 lakh, with a ₹95 lakh super top-up, taking the total health cover to ₹1.2 crore. What is your target retirement corpus? I don't have a specific corpus goal. I monitor my withdrawal rate, which is now comfortably below the commonly recommended safe rate. If I were to retire today, my withdrawal rate would be below 3%, which is very sustainable. And the corpus is sufficient for my lifetime needs. Do you have any other financial goals? Yes, I have a separate portfolio for my son's education—covering both undergraduate (UG) and postgraduate (PG) studies. It's reasonably funded and managed in a manner similar to my retirement portfolio, though with slightly lower exposure to equities. Your message to the people who are planning their retirement? It's not just about achieving returns—though my portfolio has delivered around 13.6%—but about consistently increasing investments year after year. I've maintained an 18–19% step-up rate in investments annually since 2008. This rate of increasing my SIPs has had a more significant impact on wealth creation than the returns themselves. Even if most people can't manage that, aiming for at least a 5–10% increase each year can go a long way, especially if they resist lifestyle inflation. Simply relying on returns won't build wealth. A high return on a small investment won't get you far. For salaried individuals, increasing the amount you invest is more critical than chasing returns. Your message to the people who want to achieve FIRE? I prefer calling it 'financial independence' rather than retirement—because I still work, and I enjoy it. Many people either set extreme goals like retiring at 35 or assume they'll work forever. Both approaches carry risks. Without a clear plan or purpose after quitting a job, people often face mental and even physical health challenges. Financial independence shouldn't be an escape from a toxic job; it should be a move toward something purposeful and fulfilling. One of the biggest pitfalls I see is under-investment for retirement. People underestimate how much they'll need. My recommendation is to invest consistently—and to keep increasing your investments steadily over time. More importantly, retirement planning today is very different from what it was for our parents. Earlier generations could rely heavily on fixed income instruments and government schemes. But today's retirees must navigate market-linked instruments like mutual funds and equity, which require a certain level of expertise. Unfortunately, many investors—and even advisors—haven't fully adapted to this shift. A common mistake is taking on too much equity risk post-retirement. Allocating more than 30% of your corpus to equity after retirement can be dangerous unless you have a very large corpus. The key is maintaining the right asset allocation and following a conservative withdrawal strategy to ensure long-term financial stability. Are systematic withdrawal plans (SWPs) a good idea for retirees? They can be risky if not handled carefully. Many people use SWPs from equity funds without realising that market downturns will force them to sell more units, draining the portfolio faster. SWP backtests are misleading—they assume perfect past conditions. A better approach is to do SWPs from low-volatility funds and grow your equity portion gradually. Only if you have a very low withdrawal rate (like 1%), can you afford higher equity risk. What's your recommended bucket allocation for those planning retirement? I suggest using a bucket strategy to manage retirement savings more efficiently: If managed well, this structure allows for smart rebalancing—shifting gains from equities into the income bucket during bull markets—helping you maintain both growth and stability over time. That said, many investors today are overly optimistic and tend to ignore market risks. Take the sharp drop on election result day, for example—events like political instability or a fractured mandate can quickly derail market assumptions. It's crucial to remain realistic about long-term returns and focus on diversification, especially when managing your retirement nest egg. More from the Guru Portfolio series: Why PrimeInvestor's Srikanth Meenakshi prefers mutual funds to stocks Why Sumit Shukla has funds tied up in NPS tier-II, not MFs Large-caps & Reits: India's largest investment adviser's shifts
