MFs try to attract investors thru Rajiv Gandhi equity schemes

Our Bureau Mumbai | Updated on November 20, 2017

First-timers likely to prefer mutual funds than direct entry

Fund houses are now trying to capitalise on Rajiv Gandhi Equity Savings Scheme (RGESS).

Already four mutual fund houses — DSP Blackrock, SBI, IDBI and LIC Nomura – have filed documents with the regulator for launching products under RGESS..

Fund houses are awaiting SEBI’s nod for the launch.

The scheme, which was announced by the Government in the 2012 Budget, was aimed at increasing retail participation in the equity markets.

DSP Blackrock Mutual Fund was the first to file for DSP BlackRock RGESS Fund Series 1 to 5 followed by SBI RGESS Tax Saving Fund, IDBI Rajiv Gandhi Equity Saving Scheme — Series I and LIC Nomura RGESS Fund.


Except SBI RGESS Tax Savings fund, other three are close-ended mutual funds. All these four schemes will invest minimum 90 per cent of their corpus in equity instruments and the rest in debt instruments.

The scheme is for first-time investors with an income of below Rs 10 lakh and who wish to invest up to Rs 50,000. These investors will be given a tax rebate of 50 per cent for investments into RGESS-compliant shares or mutual funds.

“We see the introduction of Rajiv Gandhi Equity Savings Scheme as a welcome initiative. Since first time investors may find it difficult to understand the risks involved in investing in capital markets, mutual funds would be the preferred route for new investors in the capital markets to offer investors the benefit of diversification, expertise of fund managers and transparency,” said Sundeep Sikka, CEO, Reliance Capital Asset Management

The RGESS guidelines allow for investments in shares which are a part of the BSE-100 or the CNX-100 indices.

They are also allowed to invest in shares and follow-on public offers of those public sector companies, which have been awarded the Maharatna, Navratna and Miniratna.

These investors are also allowed to invest in those mutual fund schemes whose underlying portfolio of stock fulfil the above criteria. The units of such schemes need to be listed and traded on stock exchanges.

According to sources, Reliance Mutual Fund also plans to launch an RGESS exchange-traded fund indexed to the CNX-100. This was, however, filed with the regulator in November last year before the guidelines for RGESS were announced. Sources said, the fund house plans to make amendments to the documents to make it RGESS-compliant.


Published on January 18, 2013

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