Axis Mutual Fund unveils Axis Income Plus Arbitrage Passive FOF

Axis Mutual Fund, an asset management company, announces the launch of the Axis Income Plus Arbitrage Passive FOF, an open-ended fund of funds scheme designed to offer investors a balance of stability, predictability, and tax efficiency. The New Fund Offer (NFO) opens for subscription on Oct 28, 2025, and closes on Nov 11, 2025.

The fund is managed by Devang Shah (Head – Fixed Income), Aditya Pagaria (Senior Fund Manager), Hardik Satra (Senior Fund Manager), and Karthik Kumar (Fund Manager).

This offering is aimed at investors seeking to optimize post-tax returns while maintaining a conservative risk profile. The fund combines investments in passive debt-oriented mutual fund schemes with arbitrage funds, creating a hybrid structure intended to deliver consistent returns over a medium-term horizon.

B. Gopkumar, MD and CEO, Axis AMC said, “At Axis Mutual Fund, our focus has always been on delivering innovative, investor-centric solutions that combine performance with simplicity. The Axis Income Plus Arbitrage Passive FOF is a testament to this philosophy—offering a unique blend of stability, transparency, and tax efficiency. In a market where predictability and post-tax returns matter more than ever, this fund is designed to empower investors with a smarter way to approach fixed income investing.”

Key Highlights of Axis Income Plus Arbitrage Passive FOF

The scheme invests approximately 50–65% of its portfolio in passive debt-oriented mutual fund schemes, targeting high-quality instruments. The underlying schemes follow a roll-down strategy, allowing investors to benefit from accrual income while minimizing interest rate risk. The remaining 35–50% of the portfolio is allocated to arbitrage funds, involving fully hedged equity positions designed to generate returns with minimal volatility. This combination helps the fund deliver debt-like returns with enhanced tax efficiency.

The scheme is benchmarked against a composite index comprising 65% NIFTY Short Duration Debt Index and 35% Nifty 50 Arbitrage TRI, reflecting its dual exposure. The fund offers high liquidity with T+2 redemption payouts and no exit load, making it flexible for investors. Additionally, its structure ensures no tax liability on rebalancing of the underlying schemes, enhancing overall efficiency.

Why Invest in Axis Income Plus Arbitrage Passive FOF

This fund is suited for corporates, high-net-worth individuals (HNIs), and retail investors seeking low to moderate risk investments that aim to offer stable returns over a medium-term horizon. The use of passive roll-down strategies in the debt component provides visibility into returns when held to maturity, while the arbitrage allocation adds a layer of return enhancement with minimal incremental risk.

The fund’s tax efficiency is another key advantage. Unlike traditional debt mutual funds or fixed deposits, which are taxed at the investor’s slab rate, the Axis Income Plus Arbitrage Passive FOF qualifies for long-term capital gains (LTCG) taxation at 12.5% if held for more than 24 months.

Ashish Gupta, CIO, Axis AMC said, “With the current market environment offering attractive accrual opportunities and investors increasingly seeking tax-efficient alternatives to traditional fixed income products, the Axis Income Plus Arbitrage Passive FOF can be a timely solution. By leveraging passive roll-down strategies and fully hedged arbitrage exposure, the fund is designed to offer a predictable and transparent investment experience.”

The fund also addresses key investor concerns—referred to as the “5Ps”: Problem of Plenty, Predictability, Portfolio transparency, Post-tax returns, and Protection from credit events. By targeting a high-quality portfolio, the fund aims to minimize credit risk. Its passive structure enhances transparency and predictability, while the hybrid allocation model offers diversification and resilience across market cycles.