The scheme will dynamically allocate between arbitrage and debt-oriented strategies, adjusting portfolio duration and credit exposure based on interest rate outlook, monetary policy stance of the Reserve Bank of India, yield curve movements, liquidity conditions and arbitrage spreads between the cash and futures markets.
According to the scheme details, exposure to units of debt-oriented mutual fund schemes, debt securities and money market instruments will remain below 65%, while at least 35% of the portfolio will be invested in arbitrage schemes.
The fund house said the structure is designed to offer tax efficiency under prevailing regulations. As a fund of funds, internal rebalancing between underlying schemes will not trigger capital gains tax at the investor level at the time of switching, though taxation will apply upon redemption, as per applicable laws.
Navneet Munot, Managing Director and Chief Executive Officer of HDFC Asset Management Company Limited, said the scheme seeks to combine income-oriented strategies with risk management through allocation across arbitrage and debt segments.
The scheme will be managed by Bhavyesh Divecha and Praveen Jain. Jain said the current fixed income environment is characterised by benign inflation and ample liquidity, while noting that spreads between lower-rated and top-rated corporate bonds are above long-term averages.
The benchmark for the scheme is a composite of 40% NIFTY 50 Arbitrage Index and 60% NIFTY Short Duration Debt Index.
The minimum investment during the NFO and continuous offer period is ₹100, with no upper limit specified. An exit load of 1% will apply if units are redeemed or switched out within 18 months from the date of allotment.
