Arbitrage funds are a type of mutual fund that exploit price differences between the cash and derivatives markets. They can be a good option for investors who are looking for a low-risk investment with the potential for moderate returns.

Here are some of the benefits of investing in arbitrage funds:

• They are relatively low-risk, as they do not invest directly in stocks or bonds.
• They can provide steady returns, even in volatile markets.
• They are tax-efficient, with long-term capital gains tax of 10% if investments are held for more than a year.

However, there are also some drawbacks to consider:

• Returns from arbitrage funds have been declining in recent years.
• These funds can be volatile in the short term.
• There may be periods when there are not many arbitrage opportunities available in the market.

Arbitrage funds to invest in 2023:

• Kotak Equity Arbitrage Fund
• Nippon India Arbitrage Fund

Please note that past performance is no guarantee of future results.

Here are some additional tips for investing in arbitrage funds:

• Invest for the long term, as arbitrage funds can be volatile in the short term.
• Diversify your portfolio by investing in a variety of asset classes, including arbitrage funds.
• Do your research and understand the risks involved before investing in any mutual fund.

Disclaimer: This is not financial advice. Please consult with a financial advisor before making any investment decisions.