Saturday, October 27, 2012

ELSS See Net Ooutflows in FY 2012-2013

According to Association of Mutual Funds of India, tax saving schemes as a category has seen net outflows of Rs 934 crore in the half year ended September 30, 2012.

In all six months in the current financial year the funds have seen net outflows. Tax saving funds, technically known as equity linked saving schemes, have three year lock in for investments. Across 49 schemes, Rs 24635 crore worth of assets are under management in this category.

Over last three year ELSS as a category has given 4.94% returns. Compared to this PPF returns are better and risk free. As existing investors are logging out and new investors are not keen to invest, these funds have been experiencing net outflows.

However, market pundits are not as bearish on these funds. ELSS, as a tax saving option may not be available next year if direct tax code is implemented.

Many distributors are still recommending these funds to ride rising equity markets and to enjoy tax breaks simultaneously. Investments up to Rs 1 lakh per financial year in these tax saving mutual fund schemes fetch tax break for investors.

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