Retail investors usually keep their short term funds parked in their savings bank account. With increasing awareness of mutual funds among investors, some investors now park their short term funds in overnight or liquid fund schemes as they may give higher returns than savings bank interest rate. Another low risk investment option for parking your short term funds is Arbitrage Funds which have the added advantage of being more tax efficient than debt funds like overnight or liquid funds. In this article, we will discuss about arbitrage funds.