Quant Mutual Fund, which had simply this Thursday launched a new fund offer (NFO) for a Dynamic Asset Allocation Fund (DAAF) that will make investments a minimal of 65% in equities and as much as 35% in debt, has been compelled to vary tack virtually in a single day as a result of adjustments dropped at debt funds’ taxation.
“The fund was initially intended for risk-averse investors, with an equally low risk appetite for volatility, preferring fixed income returns. Therefore, the scheme was endeavoring to deliver superior returns than fixed deposits with a high quality debt oriented portfolio,” the fund home mentioned in a communique late Friday.
Change in plans
In its earlier communications, the fund home had mentioned the new scheme would profit long-term traders by rendering the distinction between debt and fairness taxation to “an insignificant 66 basis points (0.66%) over a five-year holding period, due to indexation benefit on long term capital gains.”
But with the amended Finance Bill making revenue from debt mutual fund schemes taxable at revenue tax charges relevant to a person’s revenue tax slab, quant Mutual Fund mentioned “this has significantly affected our earlier positioning and consequently the strategy of quant DAAF from a taxation perspective”.
“In view of this impact, we have unanimously decided to reposition the quant DAAF and modify its taxation from debt to equity due to said amendments to the Finance Bill, 2023,” the agency mentioned, including that the funding technique for the scheme is being amended suitably.
