Nippon India launches Income Plus Arbitrage Omni Fund of Fund
Scheme structured to keep exposure to debt mutual fund schemes and debt and money market instruments below 65% at all times
Nippon India Mutual Fund has launched the Income Plus Arbitrage Omni Fund of Fund, an open-ended hybrid fund of funds scheme. This investment vehicle focuses on domestic active and passive debt-oriented and arbitrage mutual fund schemes. The fund managers aim to maintain exposure to debt mutual fund schemes and related instruments at a maximum of 65 percent at all times.
The fund's unique selling point is its tax treatment under the Income Tax Act, 2025. If a fund invests less than 65 percent in debt instruments and remains invested for more than 24 months, it qualifies for a long-term capital gains tax of 12.5 percent. This is significantly lower than the 30 percent tax slab typically applicable to specified mutual funds.
To illustrate, an investment of ₹1,00,000 at an 8 percent CAGR over 24 months would yield a post-tax value of ₹1,14,560 with this fund, compared to ₹1,11,648 for a specified mutual fund taxed at 30 percent. This results in a post-tax CAGR of 7.03 percent versus 5.66 percent for the specified fund. Unlike traditional debt or arbitrage funds where investors bear the tax burden when switching schemes, rebalancing within this fund of funds does not trigger tax liability for investors, as the fund manager handles the allocation internally.
The fund caters to investors with a minimum two-year investment horizon who seek better risk-adjusted returns, prefer delegating fund selection to a professional manager, and are high-net-worth individuals focused on post-tax efficiency. The fund's riskometer is rated as Moderate, mirroring its benchmark, a composite of 60 percent CRISIL Short Term Bond Index and 40 percent Nifty 50 Arbitrage Index.
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