SBI Mutual Fund launches new Income Plus Arbitrage Fund of Fund

SBI Mutual Fund, India’s largest fund house, has announced the launch of its latest offering, the SBI Income Plus Arbitrage Active Fund of Fund (FOF). This new open-ended scheme aims to generate regular income and capital appreciation by investing in a combination of debt-oriented and arbitrage mutual fund schemes. The New Fund Offer (NFO) is scheduled to open on April 23, 2025, and close on April 30, 2025, providing investors a limited window to participate. The fund seeks to leverage its strategic allocation to pursue its investment goals, albeit without any guarantees. 

The investment structure of the SBI Income Plus Arbitrage Active FOF allocates 50–65% of its portfolio to debt-oriented schemes and 35–50% to arbitrage mutual fund schemes, allowing for a balanced approach towards income generation and capital growth.

Additionally, the fund may invest up to 5% in money market instruments, triparty repos, reverse repos, and cash equivalents.

The scheme’s performance will be benchmarked against a composite index consisting of 65% Nifty Composite Debt Index and 35% Nifty 50 Arbitrage Index. This diversified strategy aims to optimise returns by combining stability from debt instruments with the potential upside of arbitrage opportunities. 

The new fund is managed by Ardhendu Bhattacharya, a seasoned professional associated with SBI Mutual Fund since April 2019, who oversees several debt and hybrid schemes. The minimum amount required to invest in the fund is Rs 5,000, with additional investments permitted in multiples of Rs 1,000. Investors can also opt for Systematic Investment Plans (SIPs), which are available in various frequencies including daily, weekly, monthly, quarterly, semi-annual, and annual modes, thereby providing flexibility and ease of access to investors.

SBI Mutual Fund boasts a significant presence in the Indian financial market, being a joint venture between the State Bank of India and Amundi Asset Management. With assets under management exceeding ₹10 lakh crore, the fund house maintains its status as a premier institution in the field. The launch of this new fund is expected to bolster its already substantial portfolio, enabling it to cater to a diverse range of investor needs amidst India’s growing mutual fund market. The hybrid structure of the new fund could attract investors seeking a combination of steady income and moderate risk. ‘

Who should consider this fund?

This fund is suitable for investors seeking:​

> A diversified investment approach combining debt and arbitrage strategies​

> Regular income with potential for capital appreciation​

> Exposure to actively managed schemes without directly managing individual investments​

As with all mutual fund investments, it’s essential to assess your risk tolerance and investment goals before investing.

Competing in a robust market, SBI Mutual Fund faces competition from other major players such as HDFC Mutual Fund and ICICI Prudential Mutual Fund. These rivals offer similar hybrid and arbitrage products, positioning themselves strongly in the market. HDFC Mutual Fund, for instance, is known for its large corpus in debt funds, whereas ICICI Prudential draws investors with its extensive R&D budget, continuously refining its investment strategies. With this launch, SBI Mutual Fund continues to strengthen its competitive edge and align itself with evolving market demands, aiming to capture a larger share of the burgeoning mutual fund landscape in India.