Can we use tax-free gains from arbitrage MFs for short-term needs?
Arbitrage mutual funds invest a predominant part of their portfolio in derivative and arbitrage instruments associated with the stock and bond markets. Aside from unnatural events (see below), their day to day volatility is similar to ultra-short-term funds. Thus typically arbitrage funds have debt fund-like NAV fluctuations and equity-fund like taxation. This makes it appealing…
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