Rich investors flock to arbitrage funds as volatility mounts

Rich investors have added ₹10,000 crore into arbitrage funds in March and April as they expect volatility in the markets due to state lockdowns and corporate earnings to generate higher spreads. Many are also using these instruments to stagger their investments into equity funds as this category has the potential to offer higher post-tax returns compared with liquid or overnight plans. “Volatility is likely to continue in the market due to