Axis Income Plus Arbitrage Passive FOF - NFO - Nivesh Sansar – A Mutual Fund Transaction PointNivesh Sansar

Axis Income Plus Arbitrage Passive FOF – NFO

Sushil Bajaj |
27 October 2025 |

📅 Last Updated on: October 27, 2025

Feature	Detail
Scheme Name	Axis Income Plus Arbitrage Passive FOF
NFO Date	28 Oct 2025 to 11 Nov 2025
Fund House	Axis Asset Management Company (Axis MF)
Investment Objective	Generate optimal returns over medium term via debt-oriented mutual funds + arbitrage funds
Benchmark	65% Nifty Composite Debt Index + 35% Nifty 50 Arbitrage TRI (or similar composite)
Minimum Investment	₹5000 (lump sum / SIP)
Risk Level	Moderate / Moderate (risk-o-meter)
Exit Load	None / 0%

Current Fixed Income Outlook

Last 12 months

Monetary Policy: Repo rate cut by 100 bps

Fiscal Policy: Continued fiscal consolidation

Demand–Supply: Favourable inflows due to index inclusion

System Liquidity: Hovered between neutral and positive

Way Forward

Monetary Policy: Rate cuts may be limited; no hikes expected

Fiscal Policy: Fiscal consolidation difficult; may use fiscal tools

Demand–Supply: Imbalance likely for long bonds

System Liquidity: Expected to remain neutral to surplus

Market Opportunity

We believe accrual opportunity can be currently best captured by investing in:
1.) ~3 year AAA rated financial services assets 
2.)~3 year SDLs

Investment Objective Axis Income Plus Arbitrage Passive FOF

To generate optimal returns over medium term by investing in passive debt oriented mutual fund schemes and arbitrage funds. There is no assurance that the investment objective of the Scheme will be achieved.

Benchmark Details & Riskometer

Why Invest in Axis Income Plus Arbitrage Passive FOF

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Aims for stable returns corresponding to the returns of the underlying target maturity index

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High quality: Focuses on AAA/SOV rated assets

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Tax efficient: LTCG @ 12.5%

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High Liquidity: Redemption payout on T+2 basis, no exit load

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No tax impact on rebalancing of the underlying schemes

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Tax-friendly alternative to traditional investment avenues

The fund is suited for all categories of investors – Corporates, HNIs and Retail – seeking tax-optimal investment solutions and stable returns over a holding period of 3-year roll down.

Active Versus Passive in Income Plus Arbitrage Strategy

Active

Strategy

Passive

Actively managed

Duration

Will invest in short to medium duration passive debt schemes. Currently, ~3 years maturity segment looks attractive. Underlying schemes to follow roll-down strategy in line with the respective indices*

Active Selection

Credit

AAA & SOV^ in underlying schemes

Multi-AMC

Architecture

Largely Single AMC

Targeting alpha by capturing opportunities across market cycles with tax optimization

Positioning

Targeting alpha over medium-term traditional investments with tax optimization

Depends on active calls by the Fund Manager

Returns

Broadly linked to the Index of the underlying schemes^

Investors seeking tactical alpha and active credit management

Suitability

Investors preferring predictability, transparency, and low-cost exposure

Taxation Advantage

	Debt oriented Mutual Funds	Corporate Fixed Deposit	Income Plus Arbitrage Passive FoF
Short Term Capital Gains	Slab Rate	Slab Rate	Slab Rate
Long Term Capital Gains	Slab Rate	Slab Rate	12.5% (Holding Period>24 months)

Back Tested Returns: Potential For Outperformance

3 Year Rolling Returns for Last 10 Years

Pre Tax

	Income Plus Arb Passive*	NIFTY Short Duration Debt Index	NIFTY 50 Arbitrage Index
Avg	6.84%	7.47%	5.66%
SD^	1.16%	1.31%	1.34%
Min	4.84%	4.82%	3.39%
Max	9.41%	10.24%	8.58%

Post Tax

	Income Plus Arb Passive*	NIFTY Short Duration Debt Index	NIFTY 50 Arbitrage Index
Avg	5.98%	5.23%	4.95%
SD^	1.02%	0.91%	1.17%
Min	4.24%	3.37%	2.96%
Max	8.24%	7.17%	7.50%

% instances when 3 yr daily RR of income plus arb passive is higher on post tax basis

NIFTY Short Duration Debt Index – 100%

NIFTY 50 Arbitrage Index – 84%

Impact of expenses on net returns of Income Plus Arbitrage Passive FoF is modest due to relatively lower TER of underlying passive schemes

Choosing the Right Investment Product

Unravelling an optimal approach

Conclusion

Axis Income Plus Arbitrage Passive / Active FOF is an innovative mutual fund solution designed for investors seeking a hybrid approach: combining the relatively stable returns of debt funds with the tax advantages associated with arbitrage/equity gains (if held > 2 years). It offers an attractive proposition for medium-term investors, especially those in higher tax brackets who wish to reduce tax drag on their returns. The dynamic allocation, multi-manager approach, and ability to rebalance internally are additional advantages. However, complexity, layered costs, regulatory risk, and limited long-term track record are non-trivial drawbacks.

This scheme is best suited for investors with a 2+ year horizon, moderate risk appetite, and desire for tax efficiency. If used thoughtfully as part of a diversified portfolio, it can play a valuable role in the fixed-income / hybrid allocation bucket.

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Disclaimer:- Mutual Fund investments are subject to market risks, please read scheme related documents carefully before investing.

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