Now Reading: Nippon India launches tax-friendly Income Plus Arbitrage Fund of Fund
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Nippon India launches tax-friendly Income Plus Arbitrage Fund of Fund
Nippon India launches tax-friendly Income Plus Arbitrage Fund of Fund
Nippon India Mutual Fund has launched the Income Plus Arbitrage Omni Fund of Fund, an open-ended hybrid fund of funds that invests in domestic active and passive debt-oriented and arbitrage schemes. Its…
The Story in Brief
Nippon India Mutual Fund has launched the Income Plus Arbitrage Omni Fund of Fund, an open-ended hybrid fund of funds that invests in domestic active and passive debt-oriented and arbitrage schemes. Its key selling point is tax treatment: under the Income Tax Act 2025, a fund of funds with less than 65 per cent in debt held for over 24 months qualifies for long-term capital gains tax at 12.5 per cent, versus slab rates for specified mutual funds.
For an investment of Rs 1 lakh at 8 per cent CAGR over 24 months, the fund yields a post-tax value of Rs 1,14,560 compared to Rs 1,11,648 for a fund taxed at 30 per cent. Rebalancing within the fund does not trigger tax for investors. The fund targets investors with a minimum two-year horizon, and its riskometer is rated Moderate.
The Indian Opinion
The fund's tax pitch is genuine but has caveats. The 12.5 per cent LTCG rate applies only if held over 24 months, and the example uses an optimistic 8 per cent CAGR. Fund-of-funds also carry higher expense ratios that can eat into returns. The real test will be whether the post-tax returns beat a simple debt fund after fees and over a full market cycle. Can the fund deliver on its promised 7.03 per cent post-tax CAGR?
Source: thehindubusinessline.com
This story was synthesised by AI from the source linked above.
