NFONEST

January 2013

RGESS – the new tax-saving mantra?

Fund houses are rushing to file offer documents for Rajiv Gandhi Equity Savings Scheme (RGESS). RGESS was announced in the Union Budget 2012-13 for first time retail equity investors, offering investors a tax benefit for investments up to Rs 50,000 for those who earn up to Rs 10 lakh under a new section of 80CCG. Currently investors can avail tax benefit for investments of up to Rs 1 lakh under section 80 C of the Income Tax Act through equity linked savings scheme (ELSS). Existing mutual fund investors who have not invested in equity markets directly could also be eligible for RGESS if they meet the other criteria. In such a situation where existing mutual fund investors are eligible, AMCs can tap their existing investors. Given the huge number of PAN cardholders who do not possess a demat account, the potential is big. There were more than 12 crore PAN cardholders in 2011 and around 1.25 crore demat accounts registered with NSDL and 80 lakh with CDSL as of now.

Last month, DSP BlackRock had filed an offer document with SEBI to launch its RGESS. Now, SBI and IDBI Mutual Fund have also filed their offer documents with the regulator. Fund houses are expecting to get a nod from SEBI promptly as the tax season comes to an end in March 2013. AMCs have three months’ timeframe to reach a pool of first time equity retail investors. Reliance has earlier filed an offer document for R*Shares CNX 100 ETF which it plans to convert into RGESS. Quantum Mutual Fund is tweaking its Quantum Index Fund ETF into RGESS. Peerless Mutual Fund is also in the process of filing an offer document for launching an ETF based RGESS. Religare Mutual Fund has announced that Religare Nifty ETF qualifies for RGESS.  Four of Goldman Sachs ETFs are eligible for RGESS.

Marginal Equity Funds dominate the January 2013 NFONEST, but some pure equity NFOs are in the pipeline.

DSP BlackRock Dual Advantage Fund Series – 11 (36 M)

Opens: January 7, 2013

Closes: January 21, 2013

DSP BlackRock Dual Advantage Fund – Series 11 - 36M has maturity time of 36 months from the date of allotment. The asset allocation of the fund will be in such a way that the objective of the fund to generate returns and seek capital appreciation will be met through investment in a portfolio of debt and money market securities. The fund also seeks to invest a portion of the portfolio in equity and equity related securities to achieve capital appreciation. Hence, the fund will allocate 50 to 95% of assets in debt securities, 0 to 25% in money market securities, and 5 to 25% in equity and equity related securities. The debt portfolio will invest only in securities that are rated investment grade by a rating agency. In the equities portfolio the fund manager will adopt a top down approach. The fund expects to achieve down side protection by investing in debt securities maturing on or before the duration of the fund. The fund expects the equity exposure to help investors achieve moderate returns. The performance of the fund will be benchmarked against CRISIL MIP Blended Fund Index. Dhawal Dalal and Apoorva Shah will be the Fund Managers.

ICICI Prudential Capital Protection Oriented Fund III - Plan E (60M)

Opens: January 17, 2013

Closes: January 28, 2013

ICICI Prudential Capital Protection Oriented Fund III - Plan E - 60 Months Plan is a close ended capital protection oriented fund. The tenure of the fund is 1825 days. The investment objective of the fund is to seek to protect capital by investing a portion of the portfolio in highest rated debt securities and money market instruments and also to provide capital appreciation by investing the balance in equity and equity related securities. The securities would mature on or before the maturity of the plan. The fund will allocate 70% to 100% of assets in debt securities and money market instruments with low to medium risk profile. On the flipside, it would allocate up to 30% of assets in equity and equity related securities with medium to high risk profile. The fund's performance will be benchmarked against Crisil MIP Blended Index. Debt portion of the fund will be managed by Rahul Goswami and equity portion will be managed by Rajat Chandak. The investments of the fund in ADR/GDR and other foreign securities are being handled by Atul Patel.

Union KBC Capital Protection Oriented Fund – Series 2 (G)

Opens: January 21, 2013

Closes: February 4, 2013

Union KBC Capital Protection Oriented Fund –Series 2 G is a new close-ended fund with a maturity period of 36 months from the respective date of allotment. The investment objective of the fund is to seek capital protection on maturity by investing in fixed income securities maturing on or before the tenure of the fund and seeking capital appreciation by investing in equity and equity related instruments. Hence, the fund will allocate 83 to 100% of assets in debt and money market instruments and 0 to 17% in equity and equity related instruments. The performance of the fund will be benchmarked against Crisil MIP Blended Fund Index and Mr. Ashish Ranawade will be the fund manager. 

IIFL Sensex Fund, SBI RGESS Tax Saving Fund, DWS Dynamic Bond Fund, Axis Asian Asset Income Fund, Franklin Templeton India Feeder – Asian LatAM Fund, Union KBC Short Term Debt Fund, Reliance US Equity Opportunity Fund, Reliance Close Ended Equity Fund, IDBI Rajiv Gandhi Equity Saving Scheme – Series I, HSBC Russia Equity Fund, Pramerica Midcap Opportunities Fund, BNP Paribas Capital Protection Oriented Fund Series I, II, and III, BNP Paribas Government Securities Fund, Pramerica Income Fund, IIFL Short term Income Fund, LIC Nomura RGESS Fund, and Motilal Oswal MOSt 20 Plus GILT Fund are expected to be launched in the coming months.