E-Paper
ELSS funds move from bang to whimper
Time was when tax payers thought they could eat the cake and have it too by investing in ELSS that promised capital gains that could help one avoid or minimise tax payments. No longer.
Time was when tax payers thought they could eat the cake and have it too by investing in equity-linked saving schemes (ELSS) that promised capital gains that could help one avoid or minimise tax payments. No longer.
Following the carnage in stock markets in the past year, ELSS schemes have turned tepid. Six ELSS schemes launched since December 2008 mopped up a mere Rs 16 crore, down 98 per cent from what the new ELSS schemes collected in the same period last year. That is a mere 2 per cent a fraction of what it was when the market was booming.
In the four-month period between the months of December 2007 and March 2008, the mutual fund industry came up with only three ELSS schemes but had collected as much as Rs 760 crore in the middle of a market boom that saw the benchmark Sensex of the BSE trading around its lifetime highs.
The total assets under management (AUM) of five of these schemes are now being disclosed and at current market value had no more than Rs 6.6 crore as on March 31, 2009.
“The equity market scenario is not enthusiastic and even in the months between January and March when individuals look to buy ELSS for tax saving, they did not invest much,” said the head of a mid-sized mutual fund house who did not wish to be identified.
Of the five schemes, IDFC Tax Advantage managed to collect the maximum and its AUM as on March 31, 2009 stood at Rs 3.26 crore. However, Edelweiss ELSS which was launched in December 2008, had an AUM of mere Rs 15 lakh as on March 31, less than the value of the stock portfolio of many individuals.
Collections for the existing open-ended ELSS funds also suffered and plunged 61 per cent from Rs 3,762 crore for the period between Dec 2007 and March 2008 to Rs 1,445 crore for the same period this year.
