Union KBC Tax Saver ELSS Fund NFO: Review Analysis & Details

Details about Union KBC Tax Saver ELSS Fund: Review, Analysis, Details & Investment Opinion.
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

Review: Principal Personal Tax Saver Fund (Tax-Saving ELSS)

The Principal Asset Management Company Ltd. Is managing the tax saving ELSS fund called Principal Personal Tax Saver Fund (ELSS). The scheme is in essence a Equity linked saving scheme (ELSS) and is claimed to be backed by the decades of experience that Principle Mutual Fund Managers have.

The scheme is old enough, was launched on 31-03-96.

Here are some features of this scheme:

Minimum Investment: Rs. 500

Subsequent Investment: Rs. 500

Systematic Investment Plan (SIP available? : YES

Minimum SIP investment: Rs. 500
Minimum 6 Cheques required

Entry Load 2.25%

Expense Ratio %: Has been steady at 2.5%

No. of Days for Redemption: 3 working days

Lock In period: 3 years (standard for ELSS)

Here is a chart showing the historical performance of the Principle Personal Tax Saver Fund as compared to tax Planning Equity (borrowed from Value Research) :



Unfortunately, no information is available about the way the returns are calculated.

In essence, this is a standard similar scheme as compared to any other ELSS scheme in India. The fund has standard charges for entry load, so nothing great or fascinating about it.

Major lucrative points for Principle Personal Tax Saver ELSS Fund is that it offers tax benefit and comes at the cost of a lock-in period of 3 years. Individuals looking for Tax saving at the last moment can dump their money in this fund and forget it for atleast 3 years.

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Review: UTI Long Term Advantage Fund (Save Tax benefit)

UTI Mutual Fund has come out with the NFO of its UTI Long Term Advantage Fund
UTI Mutual funds have been the front runners in the mutual fund industry in India and they have established a reputed name in money management. They have come out with this new fund called UTI Long Term Advantage Fund. Though the NFO is open from 19th December onwards, the scheme offering tax benefit will make it an attractive and considerable option for the people who want to desperately invest to save tax at the last minute.

Another thing is that presently, the markets are having a high level of volatility and have seen hovering around the bottoms. The 3 year lock-in period will ensure your money is invested in for a relatively long term of 3 years and may appreciate, provided you trust the UTI Fund management and they have good stock picking skills.
Another good feature is that this scheme being closed ended, does not qualify to claim entry load charges. Hence, it is attractive for investors who are dying for making a last minute tax savings investments.

Details of the scheme: 10 year long close ended ELSS scheme, which also offers tax benefits under section 80 C of the Income Tax Act.
NFO Period: From December 19, 2007 to March 19, 2008.

Options Available
Growth Option and Dividend Option with Payout and Reinvestment facilities.

Tax Benefit Offered: Yes, under section 80 C of Income Tax Act

Lockin Period: 3 years (minimum)

Minimum initial investment: Rs.500/- and in multiples of Rs.500/- thereafter with no upper limit.
But as per section 80 C of the Income Tax Act, 1961, the tax benefit will be available only upto a maximum amount of Rs.1,00,000/-

Entry Load: The scheme, being a close-ended scheme, is not permitted to charge Entry Load.

Exit Load : Nil. If the investor opts for redemption before the completion of 10 years the proportionate unamortized portion of the NFO expenses outstanding as on the date of the redemption shall be recovered from such investors.

Fund Manager: Ms. Swati Kulkarni
The scheme aims to provides an opportunity for capital appreciation through investment in well managed high quality companies that have potential to grow at reasonable rate in the long term

The so-called claimed benefits of investment in Equity Linked Saving Scheme

1 Opportunity for capital appreciation through power of equities


2 Tax benefits under Sec 80 C of Income Tax Act – 1961 - Contribution made by individuals & HUFs will be eligible for deduction of the whole of the amount paid or deposited subject to maximum of Rs. 100000/-
(along with other specified investments) under Section 80 C of Income Tax Act, 1961 as provided therein.


3 No long term capital gains tax (Subject to Securities Transaction Tax) on investment under equity oriented fund including ELSS Scheme.


4 Tax free dividends.

5 Shorter lock-in period in comparison to most of other tax saving instruments. 6 3 year lock- in period helps in minimizing volatility. However, the biggest advantage for investing in this scheme is that due to the lock-in period of 3 years, there will be no Long Term Capital gains tax and dividends are also taxfree

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Tax Saving Investments: Review of SBI Tax advantage Fund

As the financial year ending comes to a close, all the salaried individuals have started receiving reminders from the accounts/payroll department to gather and furnish the proofs of investments made which qualify for tax-exemptions.

Not only the salaried individuals, even businessmen across the country would be up in arms to calculate their tax-liability.

All around the various offices across India, this is the merry making time for the investments advisors, insurance agents and financial planners. High profits of commissions and handsome earnings for these individuals in these 2-3 months. However, the individuals end up making a mess of their money, when they end up buying unwanted and useless insurance products, or make unnecessary investments in the name of tax-savings. Please note that financial planning is not a last month job. You should not go for it starting in January, but start planning for it in April-May or latest by September-October period. Otherwise, in a hurry, you would end up in a situation like this.

A new find has been launched by SBI in the name of tax savings. It’s called the SBI Tax Advantage fund providing tax benefit to individuals under section 80C of Income Tax Act 1961. Primarily it’s an ELSS scheme, or Equity linked Savings scheme, with a minimum lock-in period of 3 years.

Here are the details about the SBI Tax Advantage fund as available from different sources:
What is the SBI Tax Advantage Fund – Series I about?

SBI Tax Advantage Fund – Series I is a ten year close-ended Equity Linked Savings Scheme (ELSS) with 3 year lock-in period and tax benefit. The investment objective of the scheme is to generate capital appreciation over a period of ten years by investing predominantly in equities of companies across large, mid and small market capitalization, along with income tax benefit.
Hence, once important thing that should be kept in mind while investing in this NFO is that the fund is designed for capital appreciation for 10 year long horizon.

Highlights

• NFO Price Rs. 10/- per unit

• No Entry Load for Investors

• Minimum initial investment is Rs. 500/- in multiples of Rs. 500/- thereafter with no upper limit *

• Growth and Dividend (payout) options available

• However, investment up to Rs. 1,00,000/- will qualify for deduction under section 80C of Income Tax Act 1961

Asset allocation

Instrument	Normal allocation (% of Net Asset)	Risk Profile
Equity and Equity related instruments	80 - 100%	High
Debt and Money Market Instrument and Securitised Debt ^	0 - 20%	Low to Medium

^ the scheme may invest in derivatives (equity as well as debt) and securitised debt, as and when permitted by ELSS / SEBI guidelines

Investment Objective
The investment objective of the scheme is to generate capital appreciation over a period of ten years by investing predominantly in equities of companies across large, mid and small market capitalization, along with income tax benefit.
Should I Invest in SBI Tax Advantage Fund?
SBI Tax Advantage Fund – Series I claims to offer a triple benefit:

• Equity Linked Returns

• Tax Free Returns

• No Entry Load

Another claim is on the decades of experience that the SBI Fund management has. However, they are not willing to guarantee even 1% return even if you promise to remain invested for 10 long years.

It’s a Close Ended Scheme, which means only a limited no. of units can be created, hence all the applicants will not get the units if the demand exceeds the supply.

On the official website of SBI Tax advantage fund, there are some tables showing how well the previous ELSS schemes of SBI have performed and how well they have beaten the markets and other similar instruments, but ultimately, its all filled with loads of special characters like * and ^ and other things, which makes it difficult for the common man to understand the numbers and the way they are calculated.

Ultimately, in essence, this is a similar kind of scheme as any other ELSS. Everything depends upon market conditions so, the investors have to take a chance. Withdrawal is allowed only after 3 years of lock-in period. Investors really willing to save tax and wanting to invest in the equity markets can opt for this scheme. The time seems t be justified as the markets are trading low. One may try his luck for the next 3 years (atleast).

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