A new Tata fund launching today promises low volatility and tax efficiency

Tata Asset Management has rolled out a new hybrid mutual fund — Tata Income Plus Arbitrage Active Fund of Fund (FoF) — promising low volatility and tax-efficient returns amid all the uncertainty. The New Fund Offer (NFO) opens today and closes on May 19.

The scheme targets investors with a two-year horizon. It allocates up to 65% of its portfolio to the Tata Corporate Bond Fund and at least 35% to the Tata Arbitrage Fund.

“In an environment where debt yields are attractive but equity markets remain volatile, a hybrid approach like this can potentially offer better post-tax returns than traditional debt instruments,” said Sailesh Jain, Fund Manager at Tata Asset Management.

The arbitrage component, through a fully hedged equity portfolio, is designed to generate short-term returns, while the corporate bond allocation targets consistent accrual through selective duration management.

Recent performance

The Tata Corporate Bond Fund – Regular Plan delivered an annualized return of 8.43% over the past year, outperforming the Crisil Corporate Bond A-II Index (7.97%).

Meanwhile, the Tata Arbitrage Fund – Direct Plan ranks among the top three arbitrage funds for both 1-year and 5-year SIP returns, according to Value Research.

The minimum investment in the new FoF is Rs 5,000, with equity taxation benefits applying after a two-year holding period. An exit load of 0.25% applies for redemptions within 30 days.