Zerodha Fund House (ZFH) has filed a draft Scheme Information Document (SID) for ‘Zerodha Tax Saver (ELSS) Nifty LargeMidcap 250 Index Fund’ with the Securities and Exchange Board of India (SEBI). Following the approval of the market regulator, the scheme will become available for investments by retail investors. Here is a look at the key features of this scheme, as per the draft SID.

Zerodha Tax Saver (ELSS) Nifty LargeMidcap 250 Index Fund is an open-ended passive equity-linked savings scheme with a statutory lock-in period of 3 years and tax benefit. The scheme will track the Nifty LargeMidcap 250 Index.

The proposed scheme will offer only a direct plan with a growth option. Further, as the scheme is offering only Direct Plan, no transaction charges will be levied or deducted.

As per the draft SID, this is “an Equity Linked Savings Scheme and intends to meet the requirements of any other notifications/regulations that may be prescribed by the Government/regulatory bodies from time to time”.

Investment objective

Zerodha Tax Saver (ELSS) Nifty LargeMidcap 250 Index Fund will invest in stocks comprising the Nifty LargeMidcap 250 Index in the same proportion as in the index to achieve returns equivalent to the Total Return Index of Nifty LargeMidcap 250 Index (subject to tracking error), while offering deduction on such investment made in the scheme under Section80C of the Income-tax Act,1961.

Also Read: Zerodha Nifty LargeMidcap 250 Index Fund: SIP Options, Draft Scheme Features and Details

SIP options

The ELSS index fund will provide daily, weekly, fortnightly, monthly, quarterly, half-yearly and yearly SIP options starting with a minimum amount of Rs 500. The scheme will also provide SIP top-up facility where investors will have the option to increase the SIP amount by a fixed amount at predetermined intervals.

However, this is no assurance or guarantee that the investment objective of the scheme will be achieved.

Who may invest?

The Zerodha Tax Saver (ELSS) Nifty LargeMidcap 250 Index Fund may be suitable for investors who are seeking long-term capital growth through investments in quity and equity-related securities covered by the Nifty LargeMidcap 250 Index. As per the draft scheme’s riskometer, investors’ principal will be at a “Very High Risk”.

Tax benefit

Investments up to Rs 1.5 lakh per year in this ELSS index fund will qualify for deduction under Section 80C of the Income Tax Act. This deduction can be availed by taxpayers filing their returns in the old tax regime.

Liquidity

Redemption of Units of this ELSS index fund can be made only after a period of three years (lock-in-period) from the date of allotment of Units. “Subject to the completion of lock-in period, the Subscription and redemption shall be at NAV based prices on all Business Days. The Fund shall despatch proceeds of redemption within 03 working days of receiving the valid redemption request,” the SID says.

Face value

The face value of each unit of Zerodha Tax Saver (ELSS) Nifty LargeMidcap 250 Index Fund will be Rs 10 and the scheme will track Nifty Large Midcap 250 Index TRI.

Minimum application amount

The minimum purchase price of the units of this index fund will be Rs 500 and thereafter in multiples of Rs 500. Additional purchases can be made with Rs 500 and thereafter in Re 500 multiples.

Asset allocation

The scheme will allocate up to 95% of assets in equities and equity-related securities covered by the Nifty LargeMidcap 250 Index. Up to 5% of the total assets of the scheme can be invested in debt and money-market instruments.

Fund manager

The scheme will be managed by Kedarnath Mirajkar, who has previously been a fund manager at Aditya Birla Sun Life AMC.

Disclaimer: The above content is for informational purposes only. Mutual Fund investments are subject to market risks. Please consult your financial advisor before investing.