New Delhi, Aug. 20 -- Income Plus Arbitrage Fund of Funds (FoFs) combine debt-oriented and arbitrage funds within a single mutual fund structure. These FoFs use rule-based strategies for the underlying investments, while the arbitrage fund component seeks to capture price differences between the cash and futures markets.

This structure can also create a difference in taxation compared with traditional debt funds, particularly for investors in higher tax brackets holding the investment for more than 24 months.

Income Plus Arbitrage FoFs invest in a combination of debt-oriented schemes and arbitrage-based schemes. As per the Securities and Exchange Board of India (Sebi) circular dated 26 February 2026, these FoFs can invest up to 65% in u...