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IDBI Mutual Fund sees silver lining in equity at the time when debt funds are under pressure.
"When market is bad it is good time for equity schemes as the valuations are attractive in many stocks following the recent market crash. Apart from capital appreciation, the new fund will also offer tax savings to the investors," IDBI AMC managing director & CEO Debasish Mallick said at launch of the IDBI Tax saving fund.
He said research data has shown long term equity has been able to give decent average return irrespective of market conditions.
"A study showed the return had been over 11% even in investment carried out at peak valuations of each year over a period of time," Mallick said.
IDBI MF's 95% of asset under management (AUM) is in debt and similar to industry trend had faced redemption pressure on its debt and liquid funds for the June, 2013 quarter.
The average AUM for the April-June 13' quarter was Rs 5,587 crore but on June 30 the AUM declined to Rs 3913 crore mostly due to decline asset in liquid fund, company AUM report showed.
IDBI MFis betting on tax saving equity investment scheme for the public despite sluggish market.
Mallick said being open-ended equity-linked savings scheme (ELSS) are shortest lock-in with tax benefits compared to other instruments, investors should take opportunity to invest at lower valuations.
The PE valuation has come down to 14.5%, while, it was over 17% for the last three years, Mallick said.
The new offering will remain open till September 3 and the scheme will re-open for continuous sale from September 17.
The fund house expects to garner around Rs 100 crore during the NFO period.
"We will primarily focus on retail investors for this new scheme," Mallick said.
