The fund house has declared bonus of 40 units for every 100 units held.
After seeing massive inflows in its arbitrage fund three months back, JM Financial Mutual Fund has declared bonus under its JM Financial Arbitrage Advantage Fund. The record date for the declaration of bonus was November 27. The fund house has given 40 units for every 100 units held.
Earlier in August, JM Financial Mutual Fund has introduced an annual bonus option in its JM Arbitrage Advantage Fund.
Cafemutual was the first to report that JM Financial Mutual Fund had introduced a bonus option in its JM Arbitrage Advantage Fund in which it collected Rs. 5,800 crore in less than a week’s time. Read here.
Most mutual funds are now introducing bonus options. Typically, corporate and HNI investors invest in bonus plan of a fund. Bonus units helps in setting off capital loss against capital gain in other capital assets. For instance, in a bonus issue, the investor does not pay anything. The fund allots new units for free. Thus, in a 1:1 bonus issue, the investor is allotted 1 new unit (free) for each unit already held by the investor. Since the net assets of the scheme remains the same – only the number of unit increases - the NAV drops proportionately.
The accumulated bonus units are treated as tax free after a year since arbitrage funds are treated like equity funds for tax treatment. In addition, SEBI rules says that bonus units should not be subject to exit load.
The notification of declaration of bonus was put on JM Financial Mutual Fund’s website on November 24.
JM Financial Mutual Fund has witnessed a massive growth of 72% in its AUM. Currently, it manages assets of Rs 11,976 crore as on September 2014.
