Till now, tax saving MF investment was only possible through the active route even as Sebi allowed fund houses to launch passive ELSS funds through a circular in May 2022.
Why the passive scheme:
A passive scheme allows investors to simply think of their investment as a split between FDs, PPFs, insurance, and ‘equity’ – without having to worry about deep analysis,” says Parijat Garg, a fund manager at IIFL Asset Management. From a financial planning point of view, a large-cap passive ELSS makes sense, given that large-cap funds have been struggling to outperform their benchmark indices of late. Since these schemes come with a 3-year lock-in, you can invest in such large-cap funds, get the tax benefits as a bonus and expect market returns. For outperformance, you can then focus on a bunch of multi-cap, mid- and small- cap funds.
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