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To add my anecdote, I have had arbitrage fund in my portfolio for about 10% of total.
Volatile markets are good for Arbitrage and as the market gets more stable, the returns come lower and lower.
I parked some money in arbitrage fund about 4 years ago, when all advisors were advising against it for the right reasons (no volatility, only northbound growth in everybody's radar). Turned out it was one of those good calls I made. It has not gone below 5% ever, and on average always has a return of about 6.5-6.8 -- this is equity, so the equity taxation applies as well.

Too many players, or too much AUM also is a disadvantage for arbitrage funds. But from whichever way I look at it, there is very little chance of loss of capital.

Yes that is my view as well, thanks for validating. One good thing about arbitrage funds is that they are taxed like equity. This turns out to be favorable for everyone in higher tax bracket - especially for investments less than three years.

With respect to discussion on International funds I would like to add that some of the best equity funds are in Focused category and, at present, also in International category. Not all of the international category funds are feeder funds. Many are actively managed funds specially those coming from Indian fund houses. Due to exchange rates movement international funds do give good returns.

Indian equity market is only a fraction of world and I think it is only prudent to be invested in international funds. At the same time I believe the less the restriction on the fund mandate, better will be the performance hence I would avoid any china, brazil, APAC specific funds. However I agree what ranjitnair77 said few pages back. Equity alone will not create wealth, its a myth. Just check long term graph of any index, if you entered at wrong time then even your 20 yr return will be less than debt category. So much for not timing the market blah blah and other propaganda. Its all propagated with vested interests.

Jan 2008 Nifty was at 6200 levels, today at 9000. That's 50 % return for a passive investor over 12 yrs. Even a 7% FD would have done better. Its the asset allocation and re balancing that creates wealth. In last 3 years debt funds have given fabulous returns while equity has faltered. Equity fans always look down upon debt category. But if someone would have maintained disciplined asset allocation in past 3 years they would have had less losses.

Franklin Templeton - Winding Up of 6 fixed income schemes

An Update on Scheme Borrowings, Voting Exercise and Returning Your Money - https://www.franklintempletonindia.c...-2020-k9zjsgaj

Extract: Our commitment to India and our investors remains steadfast, and our focus currentlyis to return the maximum possible value to all investors in the shortest possible time in these unprecedented times. This, we feel, is the only way to rebuild our brand reputation and more importantly, regain some of your trust.

I hope they can return all of the investor money. Many experts are expecting a loss of 20% to 30% of principal for investors. Related Link: https://economictimes.indiatimes.com...w/75501878.cms

I am trying to buy gilt funds on MFU. But can't find any direct plans. Does anyone here have more information on limited availability of direct plans on this portal?

I have invested in SBI, Reliance and IDFC gilt funds, direct, through MFUtility portal. I made these investments about a month back. Not sure if they have restricted access now.

EDIT:
Tried creating a new purchase transaction and I can see direct Gilt funds

Thank you very much. I still can't find anything other than Growth and Dividend option in my profile. Wondering if being an NRI, there are any restrictions for me. However all my other investments are in Direct mode.
Regards
Sravan

Just to make sure, did you check the "Direct" box in the first screen of an order?

Thank you very much. It has just been 6 months only that I had started purchasing one of the direct funds. And I totally forgot about that small box that needs to be ticked to get to the direct funds.:)
Thanks again for the prompt help.
Regards
Sravan

What is the opinion on NPS - Tier 2 as an investment on a long term horizon (10-15 years) as compared to Hybrid MFs?

This is for some surplus amounts over the Tier -1 investments (for tax purposes). I am not willing to put in more into Tier 1 as I don't want the money locked-in (in case of any emergency).

I use Tier 2 accounts, primarily to invest across G and C (Government and Corporate bonds) categories. My fund manager is LIC and these folks have strong institutional clout in the bond market.

The returns are inline with mutual funds of same category so there is hardly any benefit I see from a capital gains perspective.

So why to invest in this instrument - For me it is the peace of mind. Although the returns fluctuate with every passing day, the fact that my money is with government backed giants like NPS and LIC does provide some additional comfort considering my tenure to invest is around 7 to 10 years.

I did some analysis on VR before investing small amount in Arbitrage Fund. I will monitor the performance against Liquid Fund and see how it performs. Taxation is a big plus as it is treated as Equity Fund and not Debt fund.

Wondering if it makes sense to invest in MF's right now: am a bit high on cash and negative on my MF portfolio. As an alternative to G-sec funds, perhaps increase in VPF allocation would be better for the next couple of years?

Arbitrage funds always have some money in debt. And they increase the debt component when arbitrage opportunities are few. This debt portion has the same risk as debt i.e. credit and interest. I remember last year at least one arbitrage fund, Reliance i think had to create a side pocket.

It would depend on the split between debt and equity that you choose. And the time at which you made the investment.
Till the maheym due to COVID, my returns were always in the 10% range.
I've been putting in money during market dips since ~7years.

Now it stands as follows
Tier1-UTI- (Equity:CorpDebt:GovtSecurity - 50:30:20) the return now is ~6%
Tier2-UTI- (Equity:CorpDebt:GovtSecurity - 75:10:15) the return now is ~0.4%


The govt. does not provide any guarantee on the investments, the price is purely market driven. The only reason I put in money is the relative low fund management cost and ability to switch investment ratios between debt and equity.
Unlike a standard mutual fund, I've found it near impossible to compare the performance between the fund managers and to peek into the portfolios.