Nippon India Income Plus Arbitrage Omni Fund of Fund: Triple benefit of risk adjusted returns, lower volatility and tax efficiency

Nippon India MF has launched a new fund offer, Nippon India Income Plus Arbitrage Omni Fund of Fund. This fund of funds will invest in Nippon India Arbitrage Fund and Nippon India MF debt funds (both active and passive debt funds). The minimum allocation to arbitrage funds will be 35%. The balance allocation will be to fixed income, cash and cash equivalents. Since the debt allocation of the fund will be lower than 65%, long term capital gains (holding period of 24 months) will be taxed at 12.5%. The NFO will open for subscription on 17^th August 2026 and will close on 31^st August 2026.

Why invest in Income plus Arbitrage?

1. Tax efficiency: Income plus Arbitrage Funds of Funds are much more tax efficient compared to traditional fixed income (e.g. Bank FDs) and debt mutual funds.
   
   

   



2. Stability of debt funds: Fixed income is less volatile than asset classes like equity, commodities etc and can add stability to your portfolio. The standard deviations of 1 year and 3 year rolling returns of equity (represented by Nifty 50 TRI), gold (represented by MCX spot prices) and fixed income (represented by Nifty 10 year benchmark G-Sec Index) over the last 20 years that fixed income is significantly less volatile than other asset classes.
   
   

   

   Source: NSE, MCX, Advisorkhoj Research, as on 7^th August 2026. Equity is represented by Nifty 50 TRI, Gold by MCX Spot Prices and Debt by Nifty 10 year Benchmark G-Sec Index

• Exploiting arbitrage opportunities in the market with low risk: Arbitrage refers to the opportunity of making risk free profits due to price mismatch of the same underlying asset in two different market segments e.g. cash market and F&O market. Arbitrage funds are hybrid mutual fund schemes, generating returns through arbitrage opportunities. These funds have low volatility (see the charts below) and aims to generate stable returns.
  
  

  

  Source: NSE, Advisorkhoj Research, as on 7^th August 2026. Equity is represented by Nifty 50 TRI, Debt by Nifty 10 year Benchmark G-Sec Index and Arbitrage by Nifty 50 Arbitrage Index

Why invest in Income Plus Arbitrage FOF?

• Potential to outperform debt funds on a post-tax basis: The table below shows average, median, minimum and maximum 2 year rolling returns CRISIL Short Term Bond Fund (benchmark of short duration debt funds), Nifty 50 Arbitrage Index (benchmark of arbitrage funds) and 60% CRISIL Short Term Bond Index + 40% Nifty 50 Arbitrage Index (benchmark of income plus arbitrage FOF). You can see that on a post-tax basis, income plus arbitrage FOF benchmark outperformed the debt fund benchmark on all statistical parameters.
  
  

  

  Source: ICRA, AMFI, Period: 1^st April 2016 to 31^st March 2026



• Potential to generate risk adjusted returns: The table below shows average, median, minimum, maximum and standard deviation of 2 year rolling returns CRISIL Short Term Bond Fund (benchmark of short duration debt funds), Nifty 50 Arbitrage Index (benchmark of arbitrage funds) and 60% CRISIL Short Term Bond Index + 40% Nifty 50 Arbitrage Index (benchmark of income plus arbitrage FOF). You can see that even though the debt fund benchmark gave slightly higher median returns than the Income plus Arbitrage benchmark, the standard deviation (volatility) of the Income plus Arbitrage benchmark was lower than the debt fund benchmark.
  
  

  

  Source: ICRA, AMFI, Period: 1^st April 2016 to March 31^st March 2026

Why invest in Nippon India Income Plus Arbitrage Omni Fund of Fund?

• Investors do not have to worry about scheme selection or benchmark replication. The scheme will be actively managed. The fund manager will decide which schemes to select and allocation to each in Nippon India Income Plus Arbitrage Omni Fund of Fund


• Nippon India Income Plus Arbitrage Omni Fund of Fund can provide tax efficient returns. Long-term capital gains (holding period of more than 2 years) will be taxed at 12.5%.


• There will be no tax incidence for investors when there is switching between schemes in Nippon India Income Plus Arbitrage Omni Fund of Fund.


• Overall credit quality of the Nippon India Income Plus Arbitrage Omni Fund of Fund will be relatively high


• Nippon India Income Plus Arbitrage Omni Fund of Fund may have relatively low volatility with the potential to generate risk adjusted returns.

Who can find Nippon India Income Plus Arbitrage Omni Fund of Fund suitable?

• Investors who prefer to rely on the Fund Manager's expertise for investments in Active/Passive Debt-Oriented and Arbitrage Schemes


• Investors with a horizon of at least 2 years striving for relatively better risk adjusted returns


• Can be suitable tax efficient investment option for investors who prefer traditional fixed income investments like Bank FDs etc.


• High Net worth Individuals looking to optimize post tax returns

Investors should consult with their mutual fund distributors and financial advisors if Nippon India Income Plus Arbitrage Omni Fund of Fund is suitable for their investment needs.