HDFC Arbitrage Fund has emerged as the leading performer among arbitrage mutual funds over the past three months, according to data compiled by ACE MF as of June 22, 2026. The fund delivered a return of 1.5 percent during the period, placing it at the top of the category amid relatively stable market conditions.

The fund has also maintained a consistent long-term performance record, generating a compounded annual growth rate (CAGR) of 6.9 percent over the last three years. Arbitrage funds typically seek to benefit from price differences between cash and derivatives markets while maintaining relatively lower risk compared to pure equity funds.

HDFC Arbitrage Fund was followed by Kotak Arbitrage Fund and Invesco India Arbitrage Fund, both of which delivered returns of around 1.4 percent over the three-month period. The performance highlights the ability of arbitrage strategies to generate stable returns in varying market environments while offering tax-efficient alternatives for certain investors.

Arbitrage funds have gained popularity among investors seeking short-term parking avenues with the potential to earn returns higher than traditional savings instruments. Their performance is influenced by the availability of arbitrage opportunities between spot and futures markets, interest rate trends, and overall market volatility.

The latest rankings indicate that fund managers have continued to capitalize on market inefficiencies effectively, helping investors generate modest but relatively stable returns during the quarter.