Zerodha, India's largest discount brokerage firm, has filed for two mutual fund schemes. The first scheme is a tax-saving ELSS fund that will track the Nifty Large Midcap 250 Index. The second scheme is a non-ELSS fund that will also track the Nifty Large Midcap 250 Index.
This is a big development for the Indian mutual fund industry, as Zerodha is a well-known and respected brand. The company's entry into the mutual fund space is likely to attract a lot of new investors.
For new investors, it is important to understand what these two schemes are and how they work.
The ELSS Scheme
The ELSS scheme is a type of mutual fund that offers tax benefits under Section 80C of the Income Tax Act. Investors can invest up to Rs. 1.5 lakh in an ELSS scheme in a financial year and claim a deduction of the same amount from their taxable income.
The Nifty Large Midcap 250 Index is a broad market index that tracks the performance of 250 large and mid-cap stocks. This means that the ELSS scheme will invest in a diversified portfolio of stocks, which will help to reduce risk.
The ELSS scheme is a good option for investors who are looking to save tax and grow their money over the long term.
The Non-ELSS Scheme
The non-ELSS scheme is a type of mutual fund that does not offer tax benefits. However, it offers the potential for higher returns than the ELSS scheme.
The Nifty Large Midcap 250 Index is a growth-oriented index, which means that it is expected to generate higher returns over the long term. However, it also carries more risk than the ELSS scheme.
The non-ELSS scheme is a good option for investors who are looking to grow their money over the long term and can tolerate some risk.
What Does This Mean for Investors?
These schemes are low-cost and track a market index, which makes them a good option for long-term investors. The launch of these two schemes by Zerodha is a positive development for the Indian mutual fund industry. It will give investors more options to choose from and help to increase competition in the market.
If you are a new investor, it is better that you start by investing in the ELSS scheme. This is a good way to save tax and grow your money over the long term. Once you have a better understanding of the mutual fund market, you can then consider investing in other types of schemes, such as the non-ELSS scheme.
However, it is important for investors to do their research before investing in any mutual fund scheme. They should understand the risks and returns involved and choose a scheme that is right for their financial goals and risk appetite.
You can open an account on Zerodha and start investing :https://zerodha.com/open-account?c=ZMPIYG
I hope this blog has been helpful. If you have any questions, please feel free to leave a comment below.