In these times of big ticket fund IPOs, which are now going under the alias of NFOs, the category of tax-planning funds is not far behind. Reliance Tax Saver Fund has just made history by becoming the largest tax-planning fund since inception. The fund has reportedly mopped up around Rs 700 crore, much more than the largest ELSS fund in existence, which manages Rs 219 crore.
The biggest apprehension of the critics of ELSS funds has been that managing a tax-planning fund is not lucrative enough, given the fact that it is strictly a product directed towards the retail investors, and that the fund would not be able to mop-up large amount of money in the absence of big ticket investments. However, the success of Reliance Tax Saver has put all such apprehensions to rest.
On the contrary, it may prove to be much more beneficial in more than one ways. First of all, the fact that this money will not be going anywhere for at least the next three years will provide the fund manager a lot of freedom to invest without worrying about the liquidity. Secondly, one cannot deny that managing a substantial corpus for a longer term will contribute to the bottom lines of the fund house.
In fact, things have started to look up for the category post budget, as many of the existing funds have also witnessed a sharp increase in their assets in the last 3-4 months. The entire category has increased its assets by 74.50 per cent during the five month period since the start of this financial year. Among these, the noteworthy have been four funds- Magnum Taxgain , HDFC Taxsaver, Pru ICICI Tax Plan and HDFC Long Term Advantage, all of which have seen their assets increase by more than 100 per cent during the said period.
By mobilising investments from more than 3 lakh investors, Reliance Tax Saver Fund has proved that there is huge potential in the retail segment of the industry.
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