Shall i sell Arbitrage and book profit

Q & A ForumCategory: Mutual FundsShall i sell Arbitrage and book profit
Animesh asked 5 years ago
Dear Sreekanth, I parked my savings (5Lacs lumsump) in Axis Arbitrage fund Direct plan Growth - 14 months back. Due to uncertain markets these days the Arbitrage fund is giving me a return of 8.3%. Shall I liquidate and book better returns or HOLD on to it. I dont need this money now but high returns within 14month are tempting. This FY2018-19, I have other LTCG of 1.16 lacs and this redemption will add LTCG of Rs 41K. Tax on Total LTCG will be about 6k. Please guide so I may taken an informed decision. I fall in 30% tax bracket. Thanks Animesh
2 Answers
Sreekanth Staff answered 5 years ago
Dear Animesh, 8.3% is decent, that's what the best we can expect from an Arbitrage fund :) May I know the reason for investing in Arbitrage Fund?   Related article : All you need to know about Arbitrage Funds  
Animesh replied 5 years ago

Thank you for prompt revert.

I had parked by savings mainly for two reasons with 2yr horizon… I had some financial commitment but which has now got deferred by 4-6 months. Secondly I wanted some safe investment with post tax returns better than FD n with easy liquidity.

Am I on right path ???

So would it b wise to sell arbitrage units now, book profit and then re invest d principle in Arbitrage again for 12-18months horizon ?

Sreekanth Staff answered 5 years ago
Dear Animesh, LTCG of > Rs 1 lakh on equity funds/Arbitrage funds are now taxed at 10%. If your requirement is to withdraw funds after 6 months which falls in next FY, you may continue holding on to your units in Arbitrage fund. Arbitrage funds are primarily safe and can give you better returns, also considering your are in top tax slab bracket, interest earned is taxable @ 30% in your case..
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