Five funds have collected Rs. 212 crore from their NFOs this year compared to Rs. 230 crore last year.
Unlike last year, Rajiv Gandhi Equity Savings Scheme (RGESS) has failed to catch investor’s fancy this year despite some relaxations introduced by the government to make it more investor friendly.
Five RGESS schemes which were launched this year have collected close to Rs. 212 crore from their NFOs compared to Rs.230 crore, an 8% decline.
While two series of Birla Sun Life Focused Equity Fund have collected Rs. 92 crore, HDFC Rajiv Gandhi Equity Scheme Series II mobilized Rs. 60 crore. Last year, HDFC Rajiv Gandhi Equity Saving Scheme Series 1 had collected close to Rs. 110 crore. Similarly, ICICI Prudential Equity Saving Scheme Series 1 and LIC Nomura Rajiv Gandhi Equity Savings Scheme 2 have collected Rs. 45 crore and Rs. 15 crore respectively.
Experts attribute this tepid response to the complex structure of RGESS. Only first time individual investors in securities market with an annual income of up to Rs. 12 lakh can get tax benefit under Section 80 CCG of the Income Tax Act.
RGESS is designed to provide 50% deduction from income for investments of up to Rs 50,000 which is over and above deduction of Rs 1 lakh under Section 80CCG of Income Tax Act.
Some players have backed out from launching RGESS this year. DSP BlackRock, UTI and IDBI who had launched their first series last year have not launched RGESS this year due to administrative hassles and operational constraints.
According to Value Research, RGESS schemes have delivered an absolute return of 18% over a one year period.
