New Delhi, Sept. 21 -- Investors looking for a combination of debt income and arbitrage returns have a mutual fund category that combines both strategies. Income Plus Arbitrage FoFs are hybrid fund-of-funds (FoFs) that invest in other mutual fund schemes, rather than directly building the entire portfolio themselves.

Under SEBI's framework, these schemes can invest up to 65% in underlying debt-oriented schemes, with the balance invested in underlying arbitrage schemes.

ICICI Prudential Income Plus Arbitrage Omni FoF topped the 1-year return chart at 6.38%, followed by Franklin India Income Plus Arbitrage Active FoF at 6.28%.

The ICICI Prudential scheme's portfolio shows how the dual strategy works. Its largest underlying exposure is to...