IIFL Mutual Fund launches India’s first passive tax saver scheme

IIFL Mutual Fund has launched the new fund offer (NFO) of IIFL ELSS Nifty 50 Tax Saver Index Fund, India’s first Tax Saver Index Fund. The NFO opens on December 1 and closes on December 21. The scheme will re-open for subscription and redemption on an ongoing basis from January 02. Parijat Garg will be the fund manager for IIFL ELSS Nifty 50 Tax Saver Index Fund.

Like other ELSS funds, the scheme will provide the dual advantage of tax saving under Section 80C and the potential to benefit from a diversified exposure to the equity markets. According to the press release, the scheme aims to have a portfolio that mirrors the Nifty 50 Index, which comprises large cap Indian companies. This is a passive fund that is relatively low cost, 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,” says Parijat Garg, Fund Manager, IIFL AMC.


“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 behavioral biases that impact investment decision-making,” Parijat added.

The investment objective of 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. It also seeks to distribute income periodically depending on distributable surplus. 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.