IIFL Mutual Fund launches India's first passive tax-saver fund

The scheme, which opened for subscription on Thursday, will mimic the Nifty 50 index

IIFL Mutual Fund has launched India's first passive tax saver fund, almost  six months after the Securities and Exchange Board of India (Sebi) introduced the passive alternative in the Equity Linked Savings Scheme (ELSS) space.

The scheme, IIFL ELSS Nifty 50 Tax Saver Index Fund, opened for subscription on December 1 and closes on December 21, 2022.

Being an index fund, the scheme will try to mirror the Nifty 50 and generate returns in line with the movement in the index. As it will be passively managed, investors will be charged lower expenses compared to active ELSS funds, IIFL MF said in release.

"An offering of this kind was long awaited by the market. Taking exposure to the Nifty companies through a passive ELSS fund is an opportunity for investors to harness the growth potential of equities, reduce tax outgo, lower the cost of investing, and gain diversified exposure," said Parijat Garg, Fund Manager, IIFL Asset Management Company.

Till now, tax saving MF investment was only possible through the active route even as Sebi allowed fund houses to launch passive ELSS funds through a circular in May 2022.