Would the new scheme from Pramerica Mutual Fund be efficient in capitalising on arbitrage opportunities available in the market?

Moneylife Digital Team

Arbitrage funds benefit from the opportunities arising out of price differences between the equity and derivatives segments of a stock exchange. Pramerica Mutual Fund plans to launch an open ended equity oriented scheme— Pramerica Absolute Return Fund. The scheme would look for arbitrage investment opportunities and would invest in equity instruments, including derivatives, while a part of the portfolio would be invested in debt and money market instruments. According to the portfolio allocation defined in the offer document, the scheme would invest over 65% of its portfolio in equities and equity derivatives and the remaining part of the portfolio would be invested in debt and money market instruments.

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