Kotak Income Plus Arbitrage Fund Hits ₹5,000 Crore AUM Milestone in First Month

Kotak Asset Management Company (AMC) has marked a major milestone, with its newly launched Income Plus Arbitrage Fund of Funds (FOF) gathering more than ₹5,000 crore in assets under management (AUM) within the very first month of operations. The product has quickly become one of the largest in its segment, highlighting investors’ strong appetite for innovative mutual fund solutions.

Responding To Tax Reforms

The launch came as a direct response to changes introduced under the Finance Act of 2023, which removed indexation benefits and brought in slab-based taxation on capital gains from debt mutual funds. These changes reduced the edge that debt funds once held over traditional fixed deposits. To adapt, Kotak AMC designed the Income Plus Arbitrage Fund to align with the revised tax framework, offering investors an alternative that combines efficiency with flexibility.

Fund Structure and Benefits

The Income Plus Arbitrage Fund maintains a balanced approach, with up to 60% exposure to actively managed debt schemes and about 40% allocation to equity arbitrage. The fund also includes internal rebalancing, allowing allocation shifts without incurring interim taxes, ensuring that returns can compound until redemption. This mix of debt stability and arbitrage opportunities provides both flexibility and tax efficiency.

Market Adoption And Industry Impact

As per news reports, within a month of its debut, the fund had captured over 30% of the total AUM in the Income Plus Arbitrage category, establishing itself as a leading product. While several other asset managers have since rolled out similar offerings, Kotak AMC retains the advantage of being the first mover in this category. The development underscores a broader trend in the mutual fund industry, where managers are reshaping portfolios and products to remain aligned with regulatory and taxation shifts.

Read More: Mukesh Ambani's Reliance Industries Plans to Raise $2 Billion via Asset-Backed Securities!

Conclusion

Kotak AMC’s swift success with the Income Plus Arbitrage Fund signals how quickly investors are willing to adapt to market realities when given innovative solutions. The fund’s rapid growth reflects not only strong demand for tax-efficient alternatives but also the industry’s ongoing evolution in response to regulatory change.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.