Mahindra Manulife Launches Income Plus Arbitrage Active FOF for Stable Post-Tax Returns

Mahindra Manulife Mutual Fund has launched a new open-ended fund, Income Plus Arbitrage Active Fund of Fund (FOF). This scheme is designed for investors who want stable, tax-efficient returns and plan to stay invested for more than 24 months.

The NFO opens on November 21 and closes on December 1.

What This New Fund Aims to Do

The fund will invest in a mix of:

• Actively managed debt mutual funds, and
• Arbitrage funds

This blend is meant to help investors manage changing market conditions, reinvestment risks, and benefit from arbitrage spreads, while also gaining tax advantages for longer holding periods.

The goal is to offer steady returns after tax, even when interest rates or market volatility fluctuate.

Why the Fund Was Created

Anthony Heredia, MD & CEO of Mahindra Manulife Investment Management, said the fund has been built as an “all-season product”.
It aims to solve challenges like:

• Uncertain interest rate cycles
• Reinvestment risk in fixed income
• Changing arbitrage spreads
• Higher taxes on traditional debt instruments

Because this FOF structure qualifies for long-term capital gains (LTCG) tax at 12.5% after 24 months, investors may benefit from better post-tax outcomes.

How the Strategy Works

Rahul Pal, CIO – Fixed Income, explained that the fund balances:

• Interest rate movements
• Credit spreads
• Market liquidity

The debt portion will be managed actively, focusing on duration and credit quality. The arbitrage allocation will help reduce volatility when rates are uncertain.

This combination allows the fund to adjust to macroeconomic changes and aim for a smoother investment experience.

Fund Management Team

The scheme will be managed by:

• Amit Garg
• Rahul Pal
• Mitul Doshi

Their approach includes active duration management, credit evaluation, and taking advantage of arbitrage opportunities when spreads are favourable.

Who Should Invest?

This fund is suitable for investors who:

• Want long-term capital appreciation
• Prefer stable, tax-efficient returns
• Are comfortable investing in debt-oriented and arbitrage-based mutual fund schemes
• Plan to stay invested for more than 24 months

Read More, Gold ETF Inflows Slip 7% to ₹7,743 Crore in October as Record Run Cools Off.

Conclusion

Mahindra Manulife’s Income Plus Arbitrage Active FOF offers a structured and balanced approach by combining debt and arbitrage strategies. With its focus on stability, flexibility, and tax efficiency, it can be a good choice for investors seeking steady returns over the medium to long term.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. 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.

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.