IIFL Mutual Fund has introduced India’s first-ever tax saver or ELSS index fund – IIFL ELSS Nifty 50 Tax Saver Index Fund -that offers an opportunity to save tax under Section 80C and grow wealth through passive investing in large cap stocks of Nifty 50 index. It is an open-ended Passive Equity-Linked Saving Scheme (ELSS) with a statutory lock-in period of 3 years and tax benefit, tracking the Nifty 50 index
The asset management company announced the new fund offer (NFO) for the tax saver index fund on Thursday. The NFO opened on December 1 and will close on December 21. The scheme will re-open for subscription and redemption on an ongoing basis from January 02, 2023.
Twin advantage
IIFL ELSS Nifty 50 Tax Saver Index Fund will provide the twin advantage of tax saving under Section 80C and the potential to benefit from diversified exposure to the equity markets.
The tax saver index fund will aim to have a portfolio that mirrors the Nifty 50 Index, which comprises large-cap Indian companies.
One of the biggest benefits of investing in index funds is that they are passive funds that require relatively low cost as compared to actively managed schemes that tend to have a higher expense ratio.
“The Nifty 50 accounts for about 50% of India’s market cap. Taking exposure to the Nifty companies through a passive fund is an opportunity for investors to harness the growth potential of equities, reduce tax outgo, lower the cost of investing, and gain diversified exposure,” said Parijat Garg, Fund Manager, IIFL AMC.
Long-awaited offering
Garg further said that an offering of this kind was long awaited by the market. Time and again, the Indian equity market has demonstrated formidable resilience against both domestic as well as global headwinds.
“For investors, one of the ways to leverage the India growth opportunity would be a passive investment with tax-saving benefits. Due to its passive approach, the fund eliminates the selection and behavioural biases that impact investment decision-making,” Parijat said.
Investment Objective
As per the statement of IIFL Mutual Fund, the investment objective of the scheme is to invest in stocks comprising the Nifty 50 Index in the same proportion as in the index to achieve returns equivalent to the Total Returns Index of Nifty 50 Index (subject to tracking error), while offering deduction on such investment made in the scheme under section 80C of the Income-tax Act, 1961.
The scheme also seeks to distribute income periodically depending on distributable surplus. However, there is no assurance or guarantee that the investment objective of the Scheme would be achieved. Investments in this scheme would be subject to a statutory lock-in of 3 years from the date of allotment to avail Section 80C benefits.
Highlights
- Dual Advantage: Tax benefit + Opportunity for wealth creation
- Cost Efficiency: Lower expense ratio as compared to active funds
- Options to choose from: IDCW Option – for investors opting for regular cash flows while having principal invested; Growth Option – for investors looking at wealth creation
- First of its kind scheme in the category
