Are arbitrage funds completely risk-free?

No. Arbitrage funds involve low risk, but execution issues and market disruptions may affect returns. They are safer compared to equity funds, but not completely free from risk.

Can arbitrage funds give negative returns?

Negative returns from arbitrage funds are rare. However, it is possible when arbitrage opportunities are low or when the market comes under sudden stress.

Is an arbitrage fund better than an FD for short-term goals?

It depends on your need for liquidity and expectations. Arbitrage funds offer flexibility, while FDs provide certainty.

How long should one stay invested in an arbitrage fund?

Arbitrage funds are suitable for short to medium horizons. Typically, you can stay invested in these funds for a few months or up to a year.

Do arbitrage funds work in all market conditions?

Arbitrage funds perform the best when markets are volatile. However, in calm markets, the returns may be lower as price differences tend to be fewer.