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Zerodha Fund House today announced the launch of the Zerodha Arbitrage Fund, an open ended scheme investing in arbitrage opportunities, that may be ideal for investors looking to park surplus cash in a tax-efficient, relatively low-volatility manner.

Investors in higher tax brackets may consider this fund since it has relatively low-risk while with the lower taxation (LTCG, STCG) applicable to equity funds.

The fund invests in a mix of equity and equity derivatives (min. 65%) and debt instruments. Rather than depending on markets rising or falling, the strategy seeks to capture temporary price differences between a stock and its corresponding derivative contract. When these pricing gaps aren't available, the fund temporarily parks the money in short-term debt instruments in accordance with the investment strategy.

With a minimum investment of ?5,000, the fund may be suitable for conservative investors looking to park surplus money for a horizon of a few months.

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