Arbitrage Funds VS Liquid Funds English

Arbitrage Funds Vs Liquid Funds

The main difference between arbitrage funds and liquid funds is that arbitrage funds exploit price differentials in equity and derivatives markets for returns, while liquid funds invest in short-term money market instruments for stability and liquidity, offering steady but lower returns compared to arbitrage funds.

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What Is Arbitrage Fund?

An arbitrage fund is a type of mutual fund that employs arbitrage strategies to capitalize on price discrepancies between cash and derivative segments of equity markets. It aims to generate returns by buying low and selling high simultaneously across different market segments.

Arbitrage funds exploit price differences between the cash and derivatives segments of equity markets. They buy stocks in the cash segment and sell equivalent futures contracts,