Clearing tax haze of emerging investment avenues

Taxes can be a complicated subject for many. This is not surprising since there are several investments whose tax treatment remains ambiguous, leading to debate, dilemma and disappointment for investors. Here, we clear the air around the tax liability of four such investment avenues. Multi-asset funds As the name suggests, multi-asset funds invest across more than one asset class. Typically, these asset classes are bonds, gold and stocks. For the same reason, multi-asset funds are branded as a 'one-stop' solution for investors looking to diversify their portfolios. These funds have started gaining traction since last year on the back of gold's strong performance, delivering returns of over 14.45 per cent in 2023 and a general apprehension whether equity markets would sustain its high in the long run. Last year, six new multi-asset funds were launched, and this category attracted net inflows of Rs 20,000 crore till November 2023. Although multi-asset funds are considered lucrative, their tax treatment might be a spoilsport. We explain why. As per Value Research classification, 31 funds currently exist in the multi-asset category. Of these, 14 are Fund-of-Funds (FOFs). As per discussions with various tax experts, these FOF

This article was originally published on January 06, 2024.