Arbitrage funds means the simultaneous sale and purchase of assets in different markets to take advantage of difference in price. Arbitrage funds invests in stocks and futures at the same time and make profits through differential pricing. These funds are a low risk investment where fund managers reduce the risk of equities by hedging against the derivatives. Arbitrage funds are ideal for those with low risk appetite but make sure that you have time horizon of at least 6 months to 1 year before investing in Arbitrage Funds.
