Nature of fund:
Open-ended Growth scheme.
Investment objective:
The SBI Arbitrage Opportunities Fund aims to provide regular income and capital appreciation by identifying and making the most of profitable arbitrage opportunities between the spot and derivative market segments and through the investment of surplus cash in debt and money market instruments.
Fund information:
| Inception date | 3rd November, 2006. |
| CRISIL rank | Not ranked. |
| Plans | •Regular. •Direct. |
| Options | •Growth. •Dividend. |
| Schemes | •SBI Arbitrage Opportunities Regular Growth Fund. •SBI Arbitrage Opportunities Regular Dividend Fund. •SBI Arbitrage Opportunities Direct Growth Fund. •SBI Arbitrage Opportunities Direct Dividend Fund. |
| Entry load | None. |
| Exit load | •For exit within 3 months from the date of allotment = 0.50%. •For exit after 3 months from the date of allotment = 0.00% |
| Minimum investment | •Rs.5,000 (in multiples of Re.1). •Additional Investment: Rs.1,000 (in multiples of Re.1). |
| SIP | Monthly
•Minimum Rs.1000 (in multiples of Re.1) thereafter for minimum six months. •Minimum Rs.500 (in multiples of Re.1) thereafter for minimum one year. Quarterly•Minimum Rs.1500 (in multiples of Re.1), thereafter for minimum one year. |
| Product label – Risk and target investors | Moderately Low Risk.
Target investors are those who seek:
•Long term capital growth. •Investments directed at exploiting possible arbitrage opportunities between the spot and derivative market segments. •To use these arbitrage opportunities to generate capital appreciation and regular income. |
| Benchmark | CRISIL Liquid Fund Index
This index was formed to track the performance of debt portfolios that include CBLO, Commercial Papers, and Certificates of Deposit. |
| SWP | Yes. |
| STP | Yes. |
| Redemption | • Rs.1,000 or 100 Units or account balance (whichever is lower). |
| Taxation (on investment and on redemption) | The tax implications of being associated and invested in this mutual fund must be thoroughly and in no uncertain terms discussed with your tax advisor. |
Fund manager
Mr. Neeraj Kumar
With over 14 years of experience in the Indian Financial Services and Capital Markets, Equity Trading and Equity Research. He was working with the Life Insurance Corporation of India up to the year 2006 when he joined SBI Mutual Funds in the capacity of a Dealer. He is also a registered Chartered Accountant.
Investment philosophy
- Market neutral trading strategy.
- The fund seeks to exploit market inefficiencies such as mispriced cash and derivative markets.
- Investments will be made on these arbitrage opportunities to generate tax-efficient, risk-free returns.
- No direct or naked exposures to stocks.
- No investments in stocks with a view to generate market-related returns.
- Equivalent exposure to both stocks and derivatives.
Portfolio – Top 10 Holdings
Top 10 holdings of the SBI Arbitrage Opportunities Fund as on the 30th of June, 2015.
| Equity | Sector | Percentage of AUM |
| Reliance Industries Ltd. | Oil & Gas | 7.39 |
| HDFC Bank Ltd. | Banking / Finance | 6.27 |
| Axis Bank Ltd. | Banking / Finance | 4.94 |
| Sun Pharmaceuticals Industries Ltd. | Pharmaceuticals | 4.59 |
| ICICI Bank Ltd. | Banking / Finance | 4.26 |
| IDFC Ltd. | Banking / Finance | 3.66 |
| Maruti Suzuki India Ltd. | Automotive | 3.44 |
| Yes Bank Ltd. | Banking / Finance | 3.06 |
| Lupin Ltd. | Pharmaceuticals | 3.02 |
| Bharat Petroleum Corp. Ltd. | Oil & Gas | 2.14 |
Risk measures:
| Sharpe Ratio | 1.57 |
| Alpha | N/A |
| Beta | 0.1 |
| Standard deviation | 0.47% |
Performance
| AUM (as on 30th of June, 2015) | Rs.888.88 crores. | ||||||||||||||||||||
| NAV (as on 1st September, 2015) | •SBI Arbitrage Opportunities Regular Growth Fund = 19.3714. •SBI Arbitrage Opportunities Regular Dividend Fund = 13.1391. •SBI Arbitrage Opportunities Direct Growth Fund = 19.5757. •SBI Arbitrage Opportunities Direct Dividend Fund = 13.7784. | ||||||||||||||||||||
| Returns and benchmark comparison |
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| Expenses |
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Expert view of the fund + outlook
The fund has not done too well in comparison to the benchmark, so new investors are advised to look for better investments plans. This scheme is not ideal to fund your child’s education or marriage, or to fund your retirement. This fund can be used to fund your lifestyle needs up to a certain point. The fund is on the safer side as it chooses to exploit arbitrage opportunities in companies. Large cap companies are less affected by the movements in the markets, adding a certain amount of safety to the investment. This fund has 63.63% exposure to large-cap companies, ensuring a degree of stability. The fund also has 4.32% exposure to mid-cap companies and 32.05% exposure to other current assets, ensuring a equitable distribution of funds across low-income stability and high-income volatility.
How to apply – online + distributors
You can apply online through the SBI mutual fund website, or alternatively call the SBI mutual funds office and they will guide you through a step-by-step procedure on how to invest. You can physically walk in to the SBI branch and fill up your KYC forms after which you will be directed on how to invest through the mutual funds investment desk at the branch. There’s a 24/7 dedicated toll free number you can call, and you can also send an SMS showing your intent to invest. All these details of the number to call or SMS can be found on the SBI mutual funds website. You can also contact any one of SBI’s Investor Service Centres.
