The Hindu Business Line : Fidelity to launch tax-saving fund

Mutual funds will be able to launch open-tax saving funds. The Finance Ministry has amended the framework of the Equity Linked Savings Scheme 2005 to permit mutual funds to provide such options for fund houses and investors. The framework as outlined earlier had ambiguity, as it appeared to replicate the 1992 regulations that specifically provided for close-end tax-saving funds.

This was amended in 1998 and mutual funds were allowed to pursue the open-end route. This clarification should set at rest the uncertainty that has prevailed for a few months now.

The Association of Mutual Funds of India (AMFI) and several fund houses have voiced concern at the high degree of churning resorted to by investors and indicated that this could work to the detriment of long-term investors in a fund.

HSBC Mutual has launched HSBC Advantage India Fund. The investment objective is to generate long-term capital growth by investing in a portfolio of stocks that are likely to benefit from India's progress, reform process and economic development.

The fund offers Dividend and Growth Options. The new fund offer period is between December 30, 2005 and January 27, 2006. There will be an entry load of 2.25 per cent during this period if the amount invested is less than Rs 5 crore. There is an exit load of 1 per cent if funds are redeemed in six months.

Fidelity Fund Management is to launch a tax-saving fund. Fidelity Tax Advantage Fund will open for subscription on January 5, 2006. The fund house proceeded with the launch following the clarification issued by the government that new funds in this category will also qualify as investment for deduction under Section 80C of the Income Tax Act. Investments in this open-end fund will have a lock-in period of three years.

Franklin Templeton Investments has mobilised Rs 1,200 crore during the new fund offer period for Franklin India Smaller Companies Fund. This was a close-end fund that closed on December 14. This fund with a five-year period aims to invest in mid- and small-cap stocks.

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