Invesco India Arbitrage Fund outperformed peers over a three-month period with a 1.5% absolute return. This category focuses on profiting from price differences between cash and derivatives markets. Investors should note that while performance is similar across major funds, returns shift over longer horizons.
Detailed Coverage
In the latest performance data for arbitrage mutual funds as of July 26, 2026, the Invesco India Arbitrage Fund has secured the top position for three-month absolute returns. The fund recorded a gain of 1.5 percent during this period, placing it at the front of a highly competitive category.
Arbitrage funds work by buying stocks in the cash market and simultaneously selling them in the futures market to lock in the price difference. This strategy is generally used by investors seeking returns that are relatively stable compared to pure equity funds, though they are subject to market volatility and changes in liquidity. Because these funds follow similar strategies, their short-term returns often appear very close to one another.
Other major players, including Kotak Arbitrage Fund and ICICI Prudential Arbitrage Fund, also delivered 1.5 percent absolute returns over the same three-month window. When looking at the scale of these funds, the Kotak Arbitrage Fund continues to maintain the largest corpus among the top five, managing assets worth over Rs 72,400 crore. In contrast, the Invesco India Arbitrage Fund manages approximately Rs 28,500 crore.
Performance leadership in this category tends to rotate depending on the time frame measured. While Invesco currently leads the three-month and one-year charts with returns of 1.5 percent and 6.0 percent respectively, the three-year performance data shows a different trend. Over a three-year period, the Kotak Arbitrage Fund has generated a compounded annual growth rate of 7.0 percent, slightly higher than its peers.
Investors looking at these funds should understand that arbitrage returns are closely linked to market volatility and the spread between cash and futures prices. When market volatility is low, the opportunities for these funds to capture price differences may decrease, which can impact the overall yield. Additionally, while these funds are often seen as a low-risk alternative to debt or equity funds, they are not risk-free and their performance can be affected by the costs of trading and changes in market conditions.
Going forward, the key factor for investors to track is the consistency of these returns across different market cycles. Since many of these top-tier funds report similar absolute gains over shorter periods, comparing long-term performance and expense ratios remains essential for a complete assessment.