Many fund houses are rechristening their ELSS schemes as long term equity funds.
In September, ICICI Prudential AMC rebranded its ELSS from ICICI Prudential Tax Plan to ICICI Prudential Long Term Equity Fund (Tax Saving).
Similarly, several fund houses are positioning their tax saving schemes as long term equity funds. In 2011, Axis AMC changed the name of its tax saver fund to Axis Long Term Equity Fund. In 2014, BNP Paribas Tax Advantage Plan was repackaged as BNP Paribas Long Term Equity Fund.
HDFC and IDBI MF also changed the name of their tax saver funds. Motilal Oswal launched its tax saver fund as MOST Long Term Equity Fund.
“It is a psychological play. Changing the name of the fund helps us position it as a long term fund,” said Srinivasan Sundararaman of MoneyKare Wealth Managers.
“We wanted to position it as a long term fund and not just a three-year tax saver fund. Instead of investing in a closed end fund, ELSS is a better way to create wealth. After we changed the name of the fund in 2011, many other AMCs have followed suit,” said Samant Sikka, Head – Business Development, Axis Mutual Fund.
Fund officials say that ‘long term’ nomenclature helps them tap a bigger universe of investors and not just those who are only looking for tax saving options.
“If we keep the scheme name as ‘tax saver’ investors tend to think that the fund is only meant for tax saving purpose. Such investors typically invest Rs. 1.50 lakh annually for tax saving. By calling it long term fund, we can attract a broader category of investors,” said Aashish Somaiyaa, Managing Director & CEO, Motilal Oswal Mutual Fund.
Also, distributors point out that tax saving funds have performed well and AMCs want to utilize this opportunity to attract more investors into ELSS. “If the scheme name has the term ‘tax saving’, investors don’t invest in it unless they wish to save tax. Tax saving funds have done well and AMCs want more investors to invest in such funds,” said a Mumbai based distributor.
Changing scheme’s name is not a new phenomenon.
Fund houses have changed their scheme nomenclature in other categories too. In January 2014, Birla Sun Life had changed its RGESS scheme name to attract more investors. Birla Sun Life RGESS was renamed as Birla Sun Life Focused Equity Fund.
Some fund houses have changed the nomenclature of their schemes to help investors and distributors get a clear idea about the fund’s objective. For instance, JP Morgan AMC changed the name of its JP India Smaller Companies Fund to JP Morgan India Mid and Small Cap Fund.
Similarly, Kotak changed its scheme name from Kotak Equity Fund of Funds to Kotak Asset Allocator Fund.
Does changing scheme name help the scheme? Let us know your thoughts.
