Arbitrage mutual funds use price differences between cash and futures markets to generate relatively stable returns with lower risk.These funds are considered suitable for conservative investors seeking better post-tax returns than traditional savings options.Top-performing arbitrage funds in 2026 include schemes from SBI, ICICI Prudential, Nippon India, Kotak, and HDFC Mutual Fund.Arbitrage funds are taxed like equity funds, making them more tax-efficient than fixed deposits for many investors.Most arbitrage funds perform better during volatile market conditions when price spreads increase.Experts recommend a minimum investment horizon of 3 to 6 months for more stable returns from arbitrage funds.Expense ratios and exit loads should be compared carefully before choosing an arbitrage mutual fund.SEBI regulations continue to improve transparency and risk management standards across mutual fund categories.Always review historical consistency, fund size, and portfolio quality instead of focusing only on short-term returns.Read More Stories.Join our WhatsApp Channel to get the latest news, exclusives and videos on WhatsApp