Edelweiss Arbitrage Fund has emerged as the top performer in the arbitrage category over a three-month period, delivering a 1.5% return. While the fund leads in this short-term window, competitors like Kotak Arbitrage Fund and Invesco India Arbitrage Fund maintain stronger positions over longer investment horizons. Investors should note that rankings in this segment often fluctuate depending on the time period measured.
The arbitrage mutual fund category has seen a shift in leadership, with the Edelweiss Arbitrage Fund recording a 1.5% return over the past three months. This data, current as of July 28, 2026, focuses on funds with assets under management (AUM) exceeding Rs 1,500 crore. In this specific three-month window, the fund has performed on par with other major players in the segment, such as the Invesco India Arbitrage Fund and Kotak Arbitrage Fund.
Performance Shifts Across Timeframes
While the recent three-month performance highlights Edelweiss Arbitrage Fund, it is important for investors to consider that rankings in the arbitrage space frequently change based on the duration of the investment. For example, the Kotak Arbitrage Fund has shown consistency in longer-term results, leading the category over a six-month period with a 3.0% return. Looking at a one-year timeframe, the Invesco India Arbitrage Fund has been a top performer, posting a 6.0% return. Over a three-year horizon, the Kotak Arbitrage Fund continues to demonstrate strength, delivering a 7.0% return.
Benchmark Comparison and Fund Scale
Beyond absolute returns, fund performance is often measured against specific benchmarks to determine how well the fund manager is delivering value. The Edelweiss Arbitrage Fund has successfully outperformed its benchmark by 1.7 percentage points on a one-year basis, where the benchmark returned 4.2%. On a three-year basis, it maintained a lead of 0.5 percentage points over its benchmark's 6.3% return.
Scale also plays a significant role in how these funds operate. The Kotak Arbitrage Fund remains the largest in the category among the top five performers, managing a substantial corpus of Rs 72,409.4 crore. For investors, the size of the AUM is a factor to track, as very large funds may face different challenges in identifying arbitrage opportunities compared to smaller, more agile funds. Arbitrage funds work by buying stocks in the cash market and simultaneously selling them in the futures market to profit from price differences. Because this strategy relies on market volatility and the gap between cash and futures prices, returns can vary significantly based on market conditions, interest rates, and trading volumes. Investors may continue to monitor how these funds adapt their strategies as market dynamics evolve and liquidity conditions shift.