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Home > Business > Special

All about Lotus India Tax Plan

November 30, 2006

  • Type
  • Open-ended tax-saving
  • Benchmark
  • BSE 100
  • Min. Investment
  • Rs 500
  • Face Value
  • Rs 10
  • Entry Load
  • 2.25%*
  • Exit Load
  • Nil
  • Issue Opens
  • November 20, 2006
  • Issue Closes
  • December 11, 2006
    * On lump sum and SIP investments for all amounts.

     Investment Objective*

    To generate long-term capital growth from a diversified portfolio of predominantly equity and equity-related securities. There is no assurance that the objective of the scheme will be realized and the scheme does not assure or guarantee any returns.
    *Source: Offer document

     Is this fund for you?

    AMCs (Asset Management Companies) are getting into a tax-saving mode, which should not surprise anyone given that there are only about 4 months left for investors to finalise their tax-planning investments. So the flurry of tax-saving funds comes at a rather opportune moment for the investor, who has an eye on this fund category.

    To be sure, tax-saving funds (also referred to as equity-linked saving scheme/ELSS) can add considerable value to the risk-taking investor wanting to save tax (under Section 80C) through equity investments. Add to this the fact that, investments in tax-saving funds are subject to a lock-in of 3 years, which in a way compels both the investor and the fund manager to take a long-term view on stock markets. Equity investments must, in any case, be made for the long-term, so a tax-saving fund fits like a glove in the aggressive investor's portfolio.

    Lotus India Tax Plan (LITP) is the maiden equity-linked offering from Lotus India Mutual Fund. While the fund house is new to the domestic mutual fund industry, Temasek (which is indirectly its Sponsor through Alexandra) does have an India office and has even been involved in some private equity deals. However, in terms of fund management, this is the first Indian venture of its kind for Temasek.

    In our view, investors should invest in existing tax-saving funds with established track records over the long-term. Two funds that come immediately to our mind are HDFC Long Term Advantage Fund (a conservative, value style fund) and HDFC TaxSaver (an aggressive, growth style fund). Since Lotus India Mutual Fund has yet to make its presence felt in the domestic fund management industry, investors should first evaluate its investment approach and processes over a time frame of 3-5 years across market cycles (particularly the downturns) before committing money to the fund house.

    For a Free download of the latest issue of Money Simplified � The 2007 Guide to Tax Planning, Click here!

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