Tata Arbitrage Fund

Derivatives

India Debt Liquid Market

Liquid

Others

Aggressive growth Investor Profile

Investor Profile

1–7 yearsInvestment Horizon

HNI, UHNI, Retail Investor, Mass AffluentTarget Segments

SEBI registered equity mutual fund suitable for all investor categoriesRegulatory Fit

Tata Arbitrage Fund Growth invests in alternative assets for non-traditional growth opportunities.

What This Strategy Does

Tata Arbitrage Reg Gr is an Equity Arbitrage fund which captures India's ₹2 trillion+ equity arbitrage opportunity through cash-and-carry strategies, deploying capital across financials, industrials, and energy to achieve benchmark-aligned compounding.

CW Expert Research Notes

Consistent Outperformance

The fund has demonstrated resilient benchmark-relative behavior, outperforming in 12 out of 12 years, highlighting its ability to deliver consistent outcomes across market cycles.

Differentiated Positioning

The fund's investment process is differentiated from peers through its strategic allocation to cash and equivalents (74.6%), coupled with a bias towards the financial services sector (39.3%), expressing conviction in potential catalysts driving this exposure.

Defensive Risk Profile

With a low volatility of 0.884 and a favorable Sharpe ratio of 1.064, the fund exhibits a defensive risk behavior, potentially playing a portfolio diversification role while offering downside protection during periods of market stress.

Performance and Risk Analysis

Historical returns, volatility patterns, and how this fund has performed relative to its benchmark.

Fund Performance

0.0% AnnuallyAlpha

+5.7% vs +10.6% benchmarkSince Inception

+6.7% vs +6.3% benchmark3Y Annualized

+6.0% vs +6.5% benchmark5Y Annualized

Tata Arbitrage Fund

Benchmark Index

Benchmark Performance Comparison

Tata Arbitrage Fund

FD Returns

Risk Profile

Standard Deviation0.3%

Sharpe Ratio0.52

Detailed Risks

Market Risk

Potential economic slowdown could reduce arbitrage opportunities, mitigated by diversified exposures.

Liquidity Risk

High mid-cap allocation risks liquidity stress, mitigated by large-cap buffer.

Concentration Risk

Concentrated mid-cap holdings face earnings risks, mitigated by diversification across sectors.

Specific Strategy Risk

Regulatory changes to arbitrage rules could impact strategy execution and monitoring.

Strategy Details

A closer look at the investment thesis, portfolio construction, and current holdings.

Core Investment Theme

Captures pricing inefficiencies across asset classes through arbitrage strategies. This approach aims to generate low-risk returns by exploiting temporary mispricing between derivatives and their underlying securities. The impact is a steady income stream with low correlation to broader markets.

Broader Market View

Market Outlook

Equity markets appear to be entering a mid-cycle phase, with attractive valuations following the recent correction. Consumption recovery, earnings normalization, and capex revival are expected to drive performance, particularly in consumer, financial services, and industrial sectors. However, risks such as margin pressures and cyclicality warrant a balanced approach.

Why This Strategy is Attractive Now

This strategy seems well-positioned for the current environment, with exposure to consumer cyclicals, financials, and technology. The portfolio's diversification across market leaders and approximately 70 holdings may provide balance between growth and stability. A moderate beta and flexibility could align the strategy with emerging opportunities while managing risks.

Investment Style & Process

Investment Style

The portfolio exhibits characteristics of a Quality Growth strategy, emphasizing companies with durable competitive advantages, consistent earnings growth, and reasonable valuations across a mix of market capitalizations.

Why it Makes Sense

In the current environment of moderating economic growth and elevated uncertainty, a Quality Growth approach focused on companies with pricing power, recurring revenue streams, and strong balance sheets may provide a degree of defensiveness while participating in secular growth opportunities.

High-Level Investment Process

Sourcing: The strategy appears to source investment ideas through a combination of quantitative screening for quality metrics and fundamental research to identify companies with sustainable competitive advantages and attractive growth runways. Selection: The selection process suggests a preference for companies exhibiting characteristics such as high returns on capital, robust free cash flow generation, and attractive reinvestment opportunities, balanced against reasonable valuation multiples. Construction: The portfolio construction process is consistent with a multi-capitalization approach, maintaining exposure across the market capitalization spectrum while seeking to manage risk through diversification and position sizing guidelines.

Portfolio Holdings Overview

SectoralAllocation

Energy & Infra6.46%

Services10.65%

Financial Services45.12%

Technology0.3%

Utilities5.11%

Capital Goods19.01%

Consumers13.35%

Geographic Allocation

Domestic100%

Top Stock Holdings

CompanySectorAllocation

Cash Offset For DerivativesUtilities65.30%

Tata Money Market Dir GrUtilities13.16%

HDFC Bank LtdFinancial Services6.94%

State Bank of IndiaFinancial Services3.15%

ICICI Bank LtdFinancial Services2.87%

Kotak Mahindra Bank LtdFinancial Services2.32%

Small Industries Development Bank of IndiaUtilities2.22%

JSW Steel LtdCapital Goods1.98%

Bharti Airtel LtdServices1.88%

Shriram Finance LimitedUtilities1.81%

Fund House Management

The asset management company’s track record, AUM scale, and fund manager credentials.

Fund Manager Track Record

Sailesh Jain

Mr. Sailesh Jain has experience of 18 years. Manages 46 funds at Tata Asset Management Pvt Ltd with an AUM of approximately ₹29,566 Cr Holds a M.B.A. degree.

18 years

Combined Team Experience

₹ 29,566 Cr

Assets Under Management

CW Expert Take

Tata AMC reflects the group's values-based approach to business. Their investment process emphasizes ESG integration and governance quality alongside financial metrics. The fund house takes measured positions, avoiding excessive concentration while maintaining conviction in quality franchises across equity and credit portfolios.

Investment Philosophy & Approach

Disciplined Approach

Tata AMC follows a disciplined investment approach focused on rigorous research.

Risk Management

Risk management is embedded in the investment process through robust controls.

Long-Term Perspective

The fund house adopts a long-term perspective in capital allocation decisions.

Operational & Regulatory Details

What it costs to invest, transaction mechanics, and regulatory disclosures you should know.

Costs and Fees

Total Expense Ratio (TER)1.09%

Exit Load0.25

Regulatory & Tax Information

INF277K015Q7

ISIN

DailyDealing Frequency

LTCG | >1Year 12.5%% on gain above 1.25 Lakh

STCG | <1Year 20%%

Tax Implications (India)