The scheme has already collected over Rs 1,300 crore.
"The arbitrage fund of Edelweiss AMC has restricted AUM collection from May 11 as we believe that in the interest of customers, we need to stick to a reasonable corpus if we have to maintain quality of performance," Edelweiss AMC Chief Executive Vikaas M Sachdeva said.
He further said the decision was taken after the fund house found it difficult to manage large investments from investors.
Launched on June 27, 2014, the Edelweiss Arbitrage Fund has given a compounded annualized return of 7.92 per cent since its inception and has consistently beaten the benchmark index.
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Total size of the arbitrage fund industry in the country stands at Rs 60,000 crore.
An arbitrage fund seeks to generate income by investing predominantly in arbitrage opportunities in cash and derivative segments of equity markets and within the derivative segment.