ELSS MFs And New Tax code

[kneekill]

Hi All

As you all might already know.. that, when the new tax code comes into effect (April 2011 ) return on all investments will be taxable. And new investment will not go into any open ended tax saving fund.section 8C will no long be present and hence ELSS will cease to exist.


a) If we make an investment in 2009/10 with 3 years lock in period, we can expect our returns only after 2012/13. i.e the ELSS performance in next 2 years will be without any new cash inflows

b)And existing customers may come out of the this tax saving instrument as they cannot save tax on investments after new tax code. Size of the funds will considerable decrease after this as result of withdrawals and no new investments


Now i have the following questions/Doubts.

1) Will the fund Houses/Managers actively manage the fund after April 2011 ?
2) How far/much will withdrawals and investments effect the existing funds ?
3) Is it a safe bet to invest in ELSS during 2010/11 ? Can we expect the returns similar to the past
4) Will the MF Industry come up with a new tax saving instrument ?


In a word what the future of Tax saving funds ?

[ninadsd]

Originally Posted by kneekill

1) Will the fund Houses/Managers actively manage the fund after April 2011 ?

AMCs will continue with these funds till 2014. After that they might merge it with some of their other diversified funds.

Originally Posted by kneekill

2) How far/much will withdrawals and investments effect the existing funds ?

Withdrawals will be same. Investments in these funds will not have any tax benefit.

Originally Posted by kneekill

3) Is it a safe bet to invest in ELSS during 2010/11 ? Can we expect the returns similar to the past

Yes.

Originally Posted by kneekill

4) Will the MF Industry come up with a new tax saving instrument ?

They should. Something based on EET model.

[kneekill]

Originally Posted by ninadsd

AMCs will continue with these funds till 2014. After that they might merge it with some of their other diversified funds.

I was hoping that they will give us the choice of selecting the fund from the same house with same type opted for the ELSS (example: open ended : growth etc....)