MFs race to maximise inflows before April 1

In a swift reaction to the amendment to the Finance Bill, 2023, passed in Parliament on Friday, which will not allow the indexation benefit for a clutch of schemes from April 1, fund houses have opened up subscription to various debt, international, and gold schemes to maximise inflows before the end of the current fiscal.

Radhika Gupta, MD and CEO of Edelweiss MF, on Saturday announced that the fund house would open seven international funds for subscription on Monday. These were among schemes involving switch-in or lump sum transactions, which were suspended last year after the markets regulator had banned inflows into international funds.

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However, the suspension was lifted in June, with the regulator allowing subscriptions up to a permissible level without breaching overseas investment limits. The fund house has reopened its ASEAN equity offshore, Greater China equity offshore, US Tech equity FoF, EM opportunities equity offshore, Europe dynamic equity offshore,US value equity offshore, and MSCI India domestic & world healthcare 45 index fund.

Axis MF had, in a press note late on Friday, said: “One caveat for existing investors remains that existing investments in debt, international, and gold funds, along with new investments made until March 31, 2023, will not be affected by the proposed amendments.” It added that investors could revisit their portfolios and re-allocate funds towards debt and global funds to optimise portfolios.

Mirae Asset, too, has opened its overseas funds up for subscription. These are: NYSE FANG+ ETF FoF, the S&P 500 Top 50 ETF FoF, and the Hang Seng TECH ETF FoF, said a notification. Direct applications via the fund house would be allowed for investors purchasing in a basket size, while those applying for smaller sizes will have to trade on the exchanges, said Siddharth Srivastava, head, ETF Products.

According to the amendment to the Finance Bill, gains accrued from debt/gold/international funds having below 35% equity exposure will no longer get an indexation benefit. Such gains — to be treated as short-term capital gains hereon — will be added to the taxable income and get taxed at the slab rate.

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Others fund houses such as Aditya Birla Sun Life AMC said its debt funds, including target maturity funds, along with its gold and silver FoFs, are already open for subscription.

Investors subscribing to such schemes before the financial year-end will still be eligible for the indexation benefit, given that the new norms kick in from April 1, 2023.