With just 9 days remaining for the closure of financial year 2012-13, AMCs and advisers are doing all they can to woo investors into ELSS.
ELSS sales seem to have slowed down this year. SEBI data shows that the industry clocked gross sales of Rs 2030 crore during April 2012 – Feb 2013 (March data is not available yet) compared to Rs 2698 crore gross sales during April 2011 – March 2012.
The net outflows too have been higher this year. This year the industry recorded net outflow of Rs 1909 crore compared to net outflows of Rs 143 crore during April 2011- March 2012.
However, AMCS are hopeful that the year will end well. DP Singh, Executive Director and CMO (Domestic Business) of SBI Mutual Fund, said that they have received similar response as compared to previous year in ELSS. “Like every year we are hopeful of getting more investments in our ELSS as the year ends.”
“We have received around Rs 50 crore in ELSS. The inflows were better than last year but not up to our expectations even though our performance was better,” said Ajit Menon, EVP, DSP Black Rock Investment Managers.
UTI is expecting to accumulate nearly Rs 150 crore from the ELSS scheme by the year end. LIC Nomura too is expecting to collect decent inflows in its ELSS this time.
“The ELSS category gathers steam at the end of every financial year. There has always been a last minute rush in ELSS. Due to the lock-in period getting over and uncertain markets, investors usually tend to move out even if they have lost money when they should stay invested,” said Hemant Rustagi of Wiseinvest Advisors.
AMCs are also facing a challenge from other tax saving instruments. “Investors typically park in ELSS during the last two weeks of financial year end. This time around, AMCs are focusing more on RGESS,” said a sales head of a leading fund house.
Gajendra Kothari of Etica Wealth Management said “The hype of RGESS has dampened the sheen of ELSS to a larger extent. However, I’m hopeful of getting some inflows in ELSS as the year ends.” He added that the investors prefer insurance and PPF over ELSS to save tax.
“Since there are many tax saving instruments available in the market, ELSS may not be the first priority for many people,” admitted a senior official of leading AMC.
Weak markets have also not helped ELSS. According to Value Research, ELSS category has delivered an average of 7% return over one year, 3% over three years and 6% over a five year period.
ELSS provides tax relief on investments up to Rs 1 lakh under section 80 C of the Income Tax Act. In fact, ELSS is the only tax saving instrument which provides complete equity exposure among all 80C tax saving instruments.
