The number
The median arbitrage fund returned 6.60% in the year to 1 October 2026, against 6.47% for the median liquid fund. Of 34 funds with a year of history, 26 returned at least 6.47%.
All figures are for the Direct plan, Growth option, computed from daily NAVs to 1 October 2026. Returns over a year are compounded annual rates. We last looked at this group in March, when the year's median was 6.90%.
Arbitrage against liquid
| Period | Median arbitrage fund | Median liquid fund |
|---|---|---|
| 1 month | 0.24% | 0.46% |
| 3 months | 1.49% | 1.54% |
| 6 months | 3.22% | 3.28% |
| 1 year | 6.60% | 6.47% |
| 3 years (a year) | 7.26% | 6.94% |
| 5 years (a year) | 6.74% | 6.37% |
| 10 years (a year) | 6.33% | 6.12% |
Over the short windows the two are level or liquid funds are a shade ahead. Over a year or longer the arbitrage median is higher, by 0.13 points over a year, 0.32 over three years and 0.37 over five. No arbitrage fund was negative over one month or three.
Spread within the group
One-year returns run from 5.07% (Samco) to 7.60% (quant), a gap of 2.5 points. The middle is tight: 20 of the 34 funds returned between 6.50% and 6.80%.
| Fund | 1 year | 3 years (a year) | 5 years (a year) | Volatility | Worst 3-year fall |
|---|---|---|---|---|---|
| Invesco India | 6.88% | 7.46% | 7.08% | 1.05% | 0.40% |
| Tata | 6.77% | 7.47% | 6.86% | 0.99% | 0.41% |
| Mirae Asset | 6.76% | 7.37% | 6.77% | 1.14% | 0.44% |
| Kotak | 6.75% | 7.45% | 6.95% | 1.07% | 0.46% |
| Nippon India | 6.73% | 7.30% | 6.79% | 1.04% | 0.45% |
| Mahindra Manulife | 6.25% | 6.40% | 5.83% | 1.10% | 0.51% |
| NJ | 6.24% | 6.79% | n/a | 1.31% | 0.65% |
| Bank of India | 6.23% | 6.78% | 5.90% | 1.17% | 0.44% |
The five at the top have a three-year record. The four funds with the highest one-year returns overall, quant (7.60%), WhiteOak (7.14%), Franklin (7.05%) and Motilal Oswal (6.99%), have no three-year figure, so they are not in the table: a fund that has only run for a year or two cannot be compared on the longer windows.
What the risk numbers say
- Volatility is small and similar: from 0.99% to 1.56% across the funds, against category medians of about 13% to 17% for the diversified equity categories on this site.
- Worst fall: the median fund's worst three-year drop was 0.44%. The largest was HDFC's, 0.82%.
- Consistency: Tata, Invesco India and Kotak are first, second and third over three years (7.47%, 7.46%, 7.45%) and also near the top over one. The four overall one-year leaders are all newer funds with no three-year figure yet.
Reading the gap to liquid funds
The return gap between arbitrage and liquid funds is a fraction of a point. Over three years, the median arbitrage fund's 7.26% against the liquid median's 6.94% is 0.32 points a year. Arbitrage funds hold equity positions hedged with futures, so what they earn depends on the spread between the two, which changes over time.
None of this tells you which is better for your money. The right comparison for you depends on your tax position and how long you will hold, and the capital gains tax calculator can run both on your numbers.
What this does not tell you
A year is a short record. The arbitrage median was 6.90% in March and is 6.60% now.
Newer funds have thin histories. Several of the highest one-year returns belong to funds with fewer than three years of NAVs.
Past returns are not a rate. Nothing in the record tells you what these funds will earn next year.
Where to go from here
The arbitrage fund category page ranks every fund, and the cash-parking screen screens funds used for parking cash. The guide on arbitrage funds explains how they work, and our liquid fund post covers the other side of the comparison.
Frequently asked questions
How much did arbitrage funds return in the last year?
The median arbitrage fund (Direct plan, Growth option) returned 6.60% in the year to 1 October 2026. The 34 funds ranged from 5.07% to 7.60%. The median liquid fund returned 6.47%.
Are arbitrage funds safer than equity funds?
Their record is very different. The median arbitrage fund's worst three-year fall was 0.44%, and none of the 34 funds lost money over one or three months. Over the same year the median large cap fund returned -4.71%.
Which arbitrage fund returned the most?
Over one year quant Arbitrage returned the most, 7.60%, but it is one of several funds with under three years of history. Among funds with a three-year record, Invesco India returned 6.88% over one year and Tata 7.47% a year over three.
This is commentary on published data, not investment advice. WealthTicker is not a SEBI-registered adviser or distributor. Figures are as of the dates stated and can be revised by their source.
Keep reading
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To 1 October 2026 the median gilt fund lost 0.84% in three months and made 2.45% in a year, against 6.47% for liquid funds. 23 funds compared.
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Over the year to 1 October 2026 the 25 money market funds returned between 6.35% and 6.76%, a median of 6.52%, against 6.47% for liquid funds.