ITI long term equity ESS Fund

NFO Review: ITI Long Term Equity (ELSS) Fund—Regular Plan

ITI Mutual Funds has launched their ITI Long Term Equity Fund on July 15, 2019.

This NFO issue will be a new addition to the funds categorized under ELSS Tax saving schemes. This review of ITI Long Term Equity ELSS Fund will give you an idea of whether to invest or not.

Let’s see the basic details of the ITI Long Term Equity Fund.

NFO Name—ITI Long Term Equity Fund

Fund Type—Open-ended fund

NFO Open Date—July 15, 2019

NFO Close Date—Oct 14, 2019

Fund Category—Equity: ELSS

Features of ITI Long Term Equity Fund
Available Plans Growth, Dividend
Benchmark NIFTY 500 TRI
Riskometer Moderately High
Minimum Investment ₹500
Minimum Additional Investment ₹500
Minimum SIP Investment ₹500
Minimum Instalments 12
Minimum SWP ₹500
Exit Load Nil
Lock-in Period 3 years

Why Should You Go for ELSS Funds?

First thing first, Equity Linked Savings Schemes (ELSS) is the tax saving Mutual Funds which give tax benefit under section 80C. But what makes it the most desirable tax saver under section 80C?

Among all other tax saving investment instruments under section 80C, ELSS funds have the lowest lock-in period—which is only 3 years. It also has the potential to give higher capital appreciation.

Review of ITI ELSS Mutual Fund Peers

This ITI ELSS Fund is an NFO from a relatively new fund house. It is impossible to project its future performance, let alone reviewing of ITI Long Term Equity Fund without any track record.

However, we see the performance of other existing ELSS funds. This should give you an idea of how ELSS funds can perform.

Fund Name Launch Year Return Since Launch 3Year Return
(Lock-in Period)
Axis Long Term Equity Fund Dec 2009 17.06% 12.03%
DSP Tax Saver Fund Jan 2007 13.41% 10.89%
*Data as on July 12, 2019

These are two of the best performing ELSS funds as on July 12, 2019. They have shown a solid performance over the years as per the reviews. But this does not mean the ITI Long Term Equity Fund would perform the same way as well.

Before we get into the details and review of the ITI Long Term Equity Fund, we shall get to know the ITI Mutual Fund.

A Quick Review of ITI Mutual Fund

ITI Mutual Fund is one of the most recent AMCs coming into the mutual fund industry.

Online Mutual Fund

A brief visit to the company’s website shows it has got experienced personnel managing it with Mr George Heber Joseph as the CEO.

ITI Mutual Fund aims to offer opportunities to investors who look to create long term wealth. They have shown interest to achieve AUM of ₹10,000 crores in a decade of time and become one of the top players.

At present ITI Mutual Fund has three Mutual Fund Schemes, with the ITI Long Term Equity Fund as the latest inclusion.

What’s in ITI Long Term Equity Fund?

The ITI Long Term Equity Fund has the objective to provide long term capital appreciation. And they are planning to achieve this by investing predominantly in equity and equity-related securities.

The NFO of ITI Long Term Equity Fund offers units at a price of ₹10/unit. It is basic and common among all the NFOs.

i) Minimum Application Amount: Review

However, being new to the market, ITI Mutual Fund has an interesting feature. The minimum application amount of ITI Long Term Equity Fund NFO is only ₹500/- and in multiples of 500/- thereafter, which is relatively less.

But should it matter? Or does it make any difference for an investor? For investors looking for long term benefits, this cannot be considered a benefit, since the minimum application amount of other ELSS schemes are not very high in itself for investors to avoid.

ii) Asset Allocation

Asset allocation ratio of a scheme will be a key factor in determining the potential and performance of any mutual fund scheme. The ITI Long Term Equity Fund will have mixed assets of equity and equity-related securities and, short term debt and money market instruments.

Instrument % Allocation (Min-Max) Risk Level
Equities and Equity Related Securities 80%-100% High
Short Term Debt and Money Market Instruments 0%-20% Low-Medium

ITI Mutual Fund says it will be investing the ITI Long Term Equity Fund predominantly in equity and equity-related securities. However, “predominant” could only be an understatement.

As per their asset allocation, at least 80% of the ELSS fund will be invested in high-risk equity and equity-related securities at any given time. Considering this is ELSS fund—3 years lock-in of capital— this is a very aggressive approach. This approach will, in turn, reflect on the risks involved with the fund, keeping the risks always high.

Who are the Fund Managers?

The ITI Long Term Equity Fund will be co-managed by the two fund managers,

  • Mr George Heber Joseph
  • Mr Pradeep Gokhale

The duo is already managing the ITI Multi-Cap Fund together which was launched in April 2019. Apart from this, Mr George Heber Joseph is managing the ITI Liquid Fund, launched in April 2019.

Review of Existing ITI Mutual Fund’s Schemes

Leaving the ITI Long Term Equity Fund, ITI Mutual Fund has only two other funds and they are managed by the same fund managers as this.

Fund Name AUM Return Since Launch
ITI Liquid Fund 28 Crores 1.33%
ITI Multi-Cap Fund 24 Crores 2.41%
*Data as on June 30, 2019

It has been only less than 3 months for the ITI Mutual Funds. These funds are still in the building phase to find their position in the market. With just 2 months of progress, there is not much data to review a scheme. One can only say they are doing well, although it would still be a premature statement to say anything definitively.

Review of Potential Risks in ITI Long Term Equity

The ITI Long Term Equity Fund will have the standard investment risks as any other mutual fund scheme. These involve trading volumes, settlement risk, liquidity risk, default risk including possible loss of principal.

Some of the scheme-specific risks are:

    Market risk, that arises due to vulnerability to price fluctuations which will affect the returns on the scheme.

    Liquidity risk, that arises due to inefficient Asset Liability Management.

    Concentration risk, that arises due to exposure to only a few securities.

    Derivative risk, that arises due to investing in derivatives.

    Credit risk, associated with the repayment of investment.

    Performance risk, that arises due to the change in factors that affect the market.

Should You Invest in ITI Long Term Equity Fund?

Should you invest in ITI long term equity fund

If you have the time to wait for it to perform and show results, you may wait and watch. Otherwise, it’s a No—Do not invest.

The ITI Mutual Fund is a new kid on the block, there is not enough data to even take a calculated risk.

The ITI Long Term Equity Fund comes with a 3 years lock-in period; a mutual fund scheme with no underlying portfolio records can prove to be too costly. If you are all about tax saving and long term wealth creation, you can always go for the existing and performing ELSS funds.

We have seen two of the best ELSS funds in this review of ITI Long Term Equity Fund. Or any other ELSS fund with a good track record will be a better choice than taking blind risks such as investing in this.


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