HDFC Mutual Fund Receives SEBI Approval to Launch ‘HDFC Income Plus Arbitrage Omni Fund of Fund’

Mumbai, 10 October 2025: HDFC Mutual Fund has received approval from the Securities and Exchange Board of India (SEBI) to launch its new hybrid scheme – the HDFC Income Plus Arbitrage Omni Fund of Fund (FOF). This open-ended scheme primarily invests in units of domestic arbitrage and debt-oriented mutual funds, offering investors a balanced mix of stability and growth.

Scheme Objective and Investment Focus

The fund aims to generate long-term capital gains along with regular income, leveraging a combination of arbitrage opportunities and short-duration debt instruments. Its hybrid structure seeks to provide effective hedging through diversification across both arbitrage and fixed-income securities.

Performance will be assessed against a composite benchmark comprising 40% NIFTY 50 Arbitrage Index (TRI) and 60% NIFTY Short Duration Debt Index, ensuring alignment with returns from both equity arbitrage and debt markets.

Fund Details and Structure

The HDFC Income Plus Arbitrage Omni FOF will be offered in both Regular and Direct Plans, with Growth and IDCW (Income Distribution cum Capital Withdrawal) options. The minimum investment is set at ₹100, with an NFO price of ₹10 per unit. An exit load of 1% applies to redemptions or switches within 18 months, and is nil thereafter.

The scheme will be managed by Bhavyesh Divecha, CFA, an IIM Ahmedabad alumnus with over 18 years of fund management experience. The fund’s minimum target corpus is ₹10 crore.

Asset Allocation and Strategy

The fund will allocate 95–100% of its corpus to units of domestic arbitrage and debt-oriented mutual fund schemes. Up to 5% of assets may be held in debt securities and money market instruments for liquidity management.

The fund manager will dynamically rebalance allocations between arbitrage and debt strategies based on market spreads, interest rate trends, and overall liquidity conditions. This tactical flexibility aims to optimize risk-adjusted returns while maintaining portfolio resilience.

Investment Philosophy and Rationale

HDFC AMC says the new scheme offers investors a “diversified way of income generation with minimal equity volatility exposure.” The fund aims to deliver steady returns while limiting market risk by combining arbitrage spreads with short-duration debt instruments.

The company adds that this approach is designed for investors seeking continuous income from a low-risk equity portfolio, while keeping their capital in secure, liquid investments.

Risk and Liquidity Profile

According to SEBI’s riskometer, the fund is of high risk. Reflecting the hybrid investment nature of the fund, units can be repaid on any business day at the prevailing NAV. The payback amount will be wired to the investor’s account within three working days, and the IDCW, if any, will be distributed seven working days after the record date at the latest.

Regulatory and Operational Compliance

The draft Scheme Information Document (SID) confirms complete adherence to the SEBI (Mutual Funds) Regulations, 1996. The New Fund Offering (NFO) will be available for at least three and at most 15 working days. All NFO money must be deployed within 30 business days of being allotment.

REF: https://www.sebi.gov.in/filings/mutual-funds/oct-2025/hdfc-income-plus-arbitrage-omni_97218.html

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