Lotus India AGILE Tax Fund

Lotus AMC has launched a close ended Mutual fund that is an ELSS scheme. The Lotus India AGILE Tax Fund is India's first ever Quant-based tax-saving fund. This means that the stocks selected by the fund would be solely on the basis of a mathematical model rather than research and company fundamentals, technical analysis or opportunity ahead.

The primary objective of this fund is to generate capital appreciation by investing in a passive portfolio of stocks selected from the industry leaders. The portfolio of the scheme will constitute of stocks which qualify the following conditions.

• The market capitalisation of the stock chosen should not be less than the market capitalisation of the last stock of S&P CNX Nifty.
• The floating stock of the company should not be less than the least floating stock of S&P CNX Nifty.
• The stock should have a price history of at least 1 year before the date of investment.
• The industry represented by the stock should be present in the composition of S&P CNX Nifty

Of all the stocks that meet the above criteria, only the top 11 will be selected for investment. Thereafter, 9 per cent of the total corpus will be invested in each of these stocks and the remaining 1 per cent will be invested in debt and money market instruments.

Scheme Details
Issue Opens: November 15, 2007
Issue Closes: February 15, 2008
Fund Category: Equity Tax Planning
Type: Closed-end tax saving scheme
Initial Issue Expense: A maximum of 6% of the amount raised
Benchmark Index: S&P CNX Nifty
Minimum Investment: Rs. 500
Liquidity: After the lock-in period of 3 years from the date of allotment, the scheme will offer redemption or switch-out of units at monthly intervals at NAV based prices.

This model of portfolio management is a very new concept in India and there is only one fund of this model that was launched by Lotus AMC in November 2007. But its very design could mean that it could be a roaring success or a complete disaster. Investors who have a good risk appetite and is willing to experiment with a uniqe form of investment and diversification should invest in this while the not so convinced folks should prefer any good open-end tax saving fund with a proven track record over this fund.