New Delhi, Aug. 17 -- Income plus arbitrage funds have expanded rapidly since their launch, with the category now comprising 22 schemes in less than two years. Major fund houses, including HDFC Mutual Fund and Sundaram Mutual Fund, have also entered the segment this year. These debt-oriented mutual fund schemes were introduced with the aim of providing investors with potentially better post-tax returns.

However, investor interest appears to be cooling. After attracting nearly Rs.21,000 crore in 2025, income plus arbitrage funds saw investors withdraw around Rs.2,000 crore during the first seven months of 2026 through 31 July, according to MFI360 Explorer, a fund research platform from Icra Analytics.

Income plus arbitrage funds combine ...