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27 Feb 2014 06:00 PM
Birla Sun Life and LIC Nomura too launch RGESS 
Nishant Patnaik

The NFO of both funds are currently open for subscription.

Birla Sun Life and LIC Nomura have launched second series of their Rajiv Gandhi Equity Savings Scheme (RGESS). Both funds are currently open for subscription and close on March 14. Incidentally, this will be the second RGESS to be launched by Birla Sun Life this year.

So far this year, only three fund houses - ICICI Prudential, Birla Sun Life and HDFC have come out with their RGESS fund. While ICICI Equity Saving Fund Series 1 has collected Rs. 45 crore this year, Birla Sun Life Focused Equity Series 1 has mopped up roughly Rs. 60 crore. The NFO of HDFC RGESS Series 2 is to close on February 28.

Sundaram MF too is planning to launch RGESS.

Birla Sun Life Focused Equity Fund – Series 2 is a three year close ended fund which aims to generate capital appreciation by investing in a portfolio of equity instruments qualified for RGESS. The fund will invest in shares of companies from BSE 100, CNX 100 and PSU Navratnas, Maharatnas and Miniratnas. Anil Shah will manage the fund. The scheme would follow a blend of bottom up approach (for stock selection) and top down approach (for sector allocation). The fund manager would primarily focus on long term growth for identifying stocks. The objective would be to identify business with superior growth prospects and strong management available at reasonable valuation and offering higher risk adjusted returns.

Benchmarked against S&P BSE 100 index, LIC Nomura Rajiv Gandhi Savings Scheme Fund – Series II aims to provide capital appreciation from a portfolio that is substantially constituted of equity securities which are specified as eligible securities for RGESS. The minimum investment is Rs 5000. The fund will invest in stocks of BSE 100 and CNX 100. The investment strategy involves the analysis of the fundamentals and evaluation of the attractiveness of investment opportunities. Such analysis includes historical as well as current financial condition of the company, quality of the management, business prospects and valuation. Nobutaka Kitajima and Ramnath Venkateswaran will co-manage the fund.

In a press release, Nilesh Sathe, Director & Chief executive Officer, LIC Nomura Mutual Fund said “We received an overwhelming response from the investors for the ‘Rajiv Gandhi Equity Savings Scheme Fund- Series I’ and hence we are glad to announce the launch of ‘RGESS Series II’. It has been launched keeping in mind the first time investors who do not have the time and expertise to directly invest in stock markets.” The first series of LIC Nomura RGESS has an asset under management of Rs 17 crore as on December 31, 2013.

RGESS is designed to provide 50% deduction from income for investments of up to Rs 50,000 which is over and above deduction of Rs 1 lakh under Section 80C of Income Tax Act.

Last year, six fund houses had collected close to Rs. 230 crore. Value Research data shows that AUM of HDFC RGESS Fund Series I is Rs. 113 crore as on December, 31 2013. Similarly, AUM of Birla Sun Life RGESS Fund Series 1, DSPBR RGESS Series 1, UTI RGESS Retail and IDBI RGESS Series 1 are Rs. 42 crore, Rs. 44 crore, Rs. 25 crore and Rs. 18 crore respectively as on December 31, 2013.

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