After a long time, we are seeing an ELSS or Equity Linked Savings Scheme NFO coming out. Recent;y, the joint venture between Union Bank of India and KBC asset management came out with their first offering called Union KBC Equity Fund and now this ELSS Tax saver fund will add another product to their portfolio.
The Union KBC Mutual Fund House is launching their Union KBC Tax Saver ELSS Fund. In this article, we will analyze how good is this Union KBC Tax Saver ELSS Fund NFO, whether this Union KBC Tax Saver ELSS Fund offers anything new or unique for the investors and whether the investors should invest in Union KBC Tax Saver ELSS Fund.
Union KBC Tax Saver ELSS Fund NFO: Review Analysis & Details
Let's begin with some basic details about Union KBC Tax Saver ELSS Fund.What actually is an ELSS or Equity Linked Savings Scheme Fund?
An ELSS is a special mutual fund which invests the money collected from the investors in the equities listed in the stock market like any other mutual fund. However, ELSS comes with the advantage of tax benefit - i.e. the invested amount qualifies for tax deduction under section 80(C) (Section 80C Tax Savings: Complete List of Qualifying Investments) with a sum total limit of 1 Lakh Rs.
Since it is offering tax benefit, it comes with a condition - there is a lock-in period of minimum 3 years for an investor to get tax benefit on the invested amount. For e.g., if I invest Rs. 50,000 in an ELSS and claim tax benefit on that, then I am not supposed to withdraw this money atleast for next 3 years. I can withdraw that money by redeeming the fund units before 3 years, but I will loose out on the claimed tax benefit.
You can find more info on ELSS scheme in the article: Tax saving By Equity Linked Saving Schemes ELSS
What are the NFO dates for Union KBC Tax Saver ELSS Fund?
The NFO period for Union KBC Tax Saver ELSS Fund is from 8 November and will close on 9 December 2011. After the NFO period, the regular buying and redemption of fund units will start, on date 19 Dec 2011. What is so unique about this Union KBC Tax Saver ELSS Fund?
Nothing special, it's just another ELSS Mutual Fund offering investments in equity market with the advantage of tax benefit on the condition that you stay invested atleast for 3 years. There are lot many other competitor ELSS products already available in the market - like SBI Tax Advantage fund.
What are the other competitor products available in comparison to Union KBC Tax Saver ELSS Fund?
Lots and lots are availble, here are a few: Principal Personal Tax Saver Fund (ELSS), then SBI Tax Advantage fund, Reliance Equity Linked Savings Fund and many more
What are the risks of investing and trading Union KBC Tax Saver ELSS Fund?
The benchmark for Union KBC Tax Saver ELSS Fund is the BSE 100 Index. The fund manager will attempt to give similar returns like the tracking index but the tracking error will surely creep in.
By investing in any mutual fund, you are risking your money as per the will and wish and investment decisions of the fund house and fund manager.
Final Thoughts about Union KBC Tax Saver ELSS Fund?
Another ELSS scheme from a relatively new mutual fund house which has just started fund management business. Offering a tax saving ELSS might allow them some more money collection as compared to a normal mutual fund. The timing appears to be a bit early as tax year in India comes to a close in April. My thought is that possibly lauch in January would have given them more capital collection, as that is the time people really start looking for tax saving investments.
See List of All Mutual Fund and NFO Articles here
During NFO period each unit cost Rs. 10 per unit
Minimum investment Rs 500 and in multiples of Rs 500 afterwards.
Tax benefit will be available in Union KBC Tax Saver ELSS Fund, subject to lock in period of 3 years from the date of allotment.
Multiple options available for investments:
Growth Option
Dividend Option - Payout, Reinvestment facilities
Union KBC Tax Saver ELSS Fund Entry Load: No info available
Union KBC Tax Saver ELSS Fund Exit Load: No info available 1% if exit within 1 year ; 2% is exit within 6 months (this is high compared to other gold funds)
NIL beyond 1 year.
SIP or systematic investment plan? No info available.
BSE 100 Index will be the benchmark for tracking the performance of Union KBC Tax Saver ELSS Fund
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