Fincash » Kotak Equity Arbitrage Fund Vs Nippon India Arbitrage Fund
Table of Contents
Kotak Equity Arbitrage Fund and Nippon India Arbitrage Fund (Formerly Reliance Arbitrage Fund) both belong to the arbitrage category of Hybrid Fund. Arbitrage funds are a type of Mutual Funds that leverage on the price differences of different markets to earn profits. Arbitrage Funds are named after the arbitrage strategy that they use. The returns of these funds are dependent on the Volatility of the invested asset on the Market. They make use of the market inefficiencies to generate returns for their investors. Though both Kotak Equity Arbitrage Fund Vs Nippon India Arbitrage Fund belong to the same category there differ in some parameters like AUM, NAV, performances, etc. So, to make a better investment decision, let's have a look at both the schemes in a detailed manner.
Kotak Equity Arbitrage Fund was launched in the year 2005 with an aim to generate Capital appreciation by Investing in a derivative segment of the equity market and seek Income by investing in arbitrage opportunities in the cash. A portion of the Portfolio is invested in debt and money market instruments. Some of the top holdings of the fund (as on 30th June 2018) are Net Current Assets, Kotak Liquid Dir Gr, HDFC Bank Ltd, Axis Bank Ltd, Tata Steel Ltd, etc. Kotak Equity Arbitrage Fund is been currently managed by Deepak Gupta.
From October 2019, Reliance Mutual Fund has been renamed as Nippon India Mutual Fund. Nippon Life has acquired majority (75%) stakes in Reliance Nippon Asset Management (RNAM). The company will continue to run its operations without any change in structure and management.
Nippon India Arbitrage Fund, earlier known as Reliance Arbitrage Fund was launched in the year 2010. The fund seeks to generate income by taking advantage of the arbitrage opportunities that potentially exists between cash and derivative market. As the fund also invests in debt and money market securities, it profits from regular income. Some of the top holdings of Reliance/Nippon India Arbitrage Fund as on 30th June 2018 are Cash Offset For Derivatives, HDFC Bank Ltd, Housing Development Finance Corp Ltd, Axis Bank Ltd, ICICI Bank Ltd. etc. The fund is currently managed jointly by Payal Kaipunjal and Kinjal Desai.
Though both Kotak Equity Arbitrage Fund Vs Reliance/Nippon India Arbitrage Fund belong to the arbitrage category of hybrid funds, nevertheless; they differ on account of various parameters. So, let us understand the differences between both the schemes based on these parameters that are divided into four sections, namely, basics section, performance section, yearly performance section, and other details section.
Current NAV, Fincash Rating, and Scheme Category are some of the comparable elements that form part of the basics section. It is the first section in the comparison of both the schemes. The comparison of current NAV reveals that there is a drastic difference between the NAV of both the schemes. As on 31st Jul, 2018, the NAV of Kotak Equity Arbitrage Fund was INR 25.3528, while the NAV of Nippon India Arbitrage Fund was INR 18.1855. With respect to the Fincash Rating, it can be said that both the funds are rated as 4-Star. The summary comparison of the basics section is as shown in the table given below.
Parameters Basics NAV Net Assets (Cr) Launch Date Rating Category Sub Cat. Category Rank Risk Expense Ratio Sharpe Ratio Information Ratio Alpha Ratio Benchmark Exit Load Kotak Equity Arbitrage Fund
Growth
Fund Details ₹36.8798 ↑ 0.08 (0.21 %) ₹58,923 on 28 Feb 25 29 Sep 05 ☆☆☆☆ Hybrid Arbitrage 2 Moderately Low 0.96 1.75 0 0 Not Available 0-30 Days (0.25%),30 Days and above(NIL) Nippon India Arbitrage Fund
Growth
Fund Details ₹26.1381 ↑ 0.05 (0.20 %) ₹14,436 on 28 Feb 25 14 Oct 10 ☆☆☆☆ Hybrid Arbitrage 3 Moderately Low 1.07 0.57 0 0 Not Available 0-1 Months (0.25%),1 Months and above(NIL)
This section compares the Compounded Annual Growth Rate or CAGR returns of both the schemes at various intervals. Some of the time intervals include 3 Month Return, 6 Month Return, 1 Year Return, and Return since Inception. The comparison of CAGR returns shows that both Kotak Equity Arbitrage Fund and Nippon India Arbitrage Fund has performed closely in many instance. The table given below shows the summary of performance section.
Parameters Performance 1 Month 3 Month 6 Month 1 Year 3 Year 5 Year Since launch Kotak Equity Arbitrage Fund
Growth
Fund Details 0.7% 1.9% 3.8% 7.5% 6.9% 5.7% 6.9% Nippon India Arbitrage Fund
Growth
Fund Details 0.7% 1.8% 3.6% 7.1% 6.5% 5.4% 6.9%
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The comparison of absolute returns generated by both the schemes for a particular year is compared in the yearly performance section. It is the third section in the comparison of both the schemes.
Parameters Yearly Performance 2023 2022 2021 2020 2019 Kotak Equity Arbitrage Fund
Growth
Fund Details 7.8% 7.4% 4.5% 4% 4.3% Nippon India Arbitrage Fund
Growth
Fund Details 7.5% 7% 4.2% 3.8% 4.3%
It is the last section on the comparison of both the schemes that compares the elements like AUM, minimum SIP and lump sum investment and others. The comparison of AUM reveals that there is a significant difference in the AUM of both the schemes. As on 30th June 2018, the AUM of Kotak Equity Arbitrage Fund was INR 11,764 crore, while of Reliance Arbitrage Fund was INR 8,123 crores. Similarly, the minimum SIP investment for both the schemes is also different. The SIP amount for Nippon India Mutual Fund’s scheme is INR 100 and for Kotak Mutual Fund’s scheme is INR 500. However, the minimum lumpsum amount for both the schemes is the same, that is, INR 5,000. The table given below shows the comparison of other details section.
Parameters Other Details Min SIP Investment Min Investment Fund Manager Kotak Equity Arbitrage Fund
Growth
Fund Details ₹500 ₹5,000 Hiten Shah - 5.41 Yr. Nippon India Arbitrage Fund
Growth
Fund Details ₹100 ₹5,000 Siddharth Deb - 0.46 Yr.
Kotak Equity Arbitrage Fund
Growth
Fund Details Growth of 10,000 investment over the years.
Date Value 29 Feb 20 ₹10,000 28 Feb 21 ₹10,353 28 Feb 22 ₹10,799 28 Feb 23 ₹11,314 29 Feb 24 ₹12,197 28 Feb 25 ₹13,104 Nippon India Arbitrage Fund
Growth
Fund Details Growth of 10,000 investment over the years.
Date Value 29 Feb 20 ₹10,000 28 Feb 21 ₹10,338 28 Feb 22 ₹10,771 28 Feb 23 ₹11,244 29 Feb 24 ₹12,082 28 Feb 25 ₹12,939
Kotak Equity Arbitrage Fund
Growth
Fund Details Asset Allocation
Asset Class Value Cash 96.98% Debt 3.24% Other 0.06% Equity Sector Allocation
Sector Value Financial Services 22.78% Energy 8.75% Basic Materials 7.66% Consumer Cyclical 7.39% Industrials 6.11% Technology 5.07% Utility 4.11% Consumer Defensive 3.85% Communication Services 3.7% Health Care 2.62% Real Estate 1.11% Debt Sector Allocation
Sector Value Cash Equivalent 89.83% Corporate 8.51% Government 1.88% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity Kotak Money Market Dir Gr
Investment Fund | -11% ₹6,155 Cr 14,047,011
↓ -2,864,557 Kotak Liquid Dir Gr
Investment Fund | -7% ₹3,884 Cr 7,504,262
↑ 3,446,288 Reliance Industries Ltd (Energy)
Equity, Since 31 May 18 | RELIANCE6% ₹3,337 Cr 26,377,000
↓ -5,025,500 RELIANCE INDUSTRIES LTD.-FEB2025
Derivatives | -6% -₹3,324 Cr 26,172,500
↑ 25,738,000 Kotak Savings Fund Dir Gr
Investment Fund | -6% ₹3,290 Cr 756,977,377
↓ -36,351,371 Axis Bank Ltd (Financial Services)
Equity, Since 30 Jun 18 | 5322154% ₹2,326 Cr 23,591,875
↑ 2,520,000 Axis Bank Ltd.-FEB2025
Derivatives | -4% -₹2,310 Cr 23,318,750
↑ 23,286,250 ICICI Bank Ltd.-FEB2025
Derivatives | -3% -₹1,990 Cr 15,824,200
↑ 15,729,700 ICICI Bank Ltd (Financial Services)
Equity, Since 31 Dec 19 | ICICIBANK3% ₹1,982 Cr 15,824,200
↑ 10,978,800 HDFC Bank Ltd.-FEB2025
Derivatives | -3% -₹1,503 Cr 8,802,200
↑ 8,802,200 Nippon India Arbitrage Fund
Growth
Fund Details Asset Allocation
Asset Class Value Cash 94.66% Debt 5.55% Other 0.05% Equity Sector Allocation
Sector Value Financial Services 24.19% Industrials 8.62% Energy 7.9% Basic Materials 6.92% Consumer Cyclical 6.76% Consumer Defensive 4.19% Technology 4.16% Health Care 3.62% Communication Services 2.29% Utility 1.22% Real Estate 0.49% Debt Sector Allocation
Sector Value Cash Equivalent 86.35% Corporate 10.67% Government 3.19% Credit Quality
Rating Value AAA 100% Top Securities Holdings / Portfolio
Name Holding Value Quantity Nippon India Money Market Dir Gr
Investment Fund | -11% ₹1,679 Cr 4,132,789 Future on Reliance Industries Ltd
Derivatives | -5% -₹690 Cr 5,434,000
↓ -3,130,500 Reliance Industries Ltd (Energy)
Equity, Since 31 Dec 17 | RELIANCE5% ₹687 Cr 5,434,000
↓ -3,130,500 Future on Axis Bank Ltd
Derivatives | -4% -₹542 Cr 5,473,125
↑ 2,011,875 Axis Bank Ltd (Financial Services)
Equity, Since 31 Jul 23 | 5322154% ₹540 Cr 5,473,125
↑ 2,011,875 Nippon India Low Duration Dir Gr
Investment Fund | -4% ₹538 Cr 1,403,663 Future on IndusInd Bank Ltd
Derivatives | -3% -₹401 Cr 4,020,000
↓ -402,500 IndusInd Bank Ltd (Financial Services)
Equity, Since 31 Mar 19 | INDUSINDBK3% ₹398 Cr 4,020,000
↓ -402,500 Nippon India Liquid Dir Gr
Investment Fund | -3% ₹373 Cr 594,953 Future on ICICI Bank Ltd
Derivatives | -2% -₹366 Cr 2,911,300
↑ 1,141,000
Thus, based on the above pointers, it can be said that both the schemes differ on account of various parameters. Consequently, investors should be very cautious before investing in any of the Mutual Fund schemes. They should understand the modalities of the scheme completely. Also, if required, they can consult a financial advisor for an opinion. This will help the individuals to attain their goals on time in a hassle-free manner.
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