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What I understand from your reply is that arbitrage funds are zero risk funds as there is no outstanding position at the end of the day. Still some funds do give negative returns, temporarily. WHY?

As per your query, we wish to inform you that a pure Equity Arbitrage Fund i.e. 100% allocation towards Equity Cash Future Arbitrage, would not give negative returns. Furthermore pertaining to your question on some Funds showing negative returns in the short run, the reason could be either or on account of both the 2 factors mentioned below -     

  • 1. The said Arbitrage Fund may not be a pure i.e. 100% Equity Arbitrage Fund. They may be investing some percentage of the scheme assets in Debt securities. Thus, these Debt securities on account of being valued on Marked to Market basis may give negative return in the short term period.
  • 2. The scheme is charged with management fees and other expenses (TER) incurred for running the scheme. It may happen on any given day that the Portfolio return is NIL, but due to accounting of expenses, the scheme return may show a negative return.

 Advise you to further confirm/clarify the same with your Tax consultant as well.    

Disclaimer:

Risk Factors: Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Please visit - www.QuantumMF.com to read Scheme Specific Risk Factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the scheme's objective will be achieved and the NAV of the scheme(s) may go up or down depending upon the factors and forces affecting securities markets. Investment in mutual fund units involves investment risks such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the Sponsor / AMC/ Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited (AMC). The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.