Mumbai: Quant Mutual Fund will soon apply for the launch of a multi-cap fund-of-fund (FoF) which will have allocations from across its 26 funds, said two people with direct knowledge of the matter.
The fund house has completed its bouquet of equity thematic funds with the launch of commodities, public sector units, and consumption funds. Now, it wants to launch a FoF, said the two people who did not want to be identified.
Nirav Karkera, head of research at Fisdom, said this FoF will help those who want to invest in Quant MF’s portfolios but do not know where to invest at specific times. Some themes and sectors perform well at different timings.
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FoFs investing in other equity schemes are treated like debt instruments for tax purposes. This means that they are taxed at a higher rate than equity funds on the capital gains portion. Such FoFs will be taxed at the slab rate of the unitholder. However, those investing in exchange traded funds (ETFs), which, in turn, invest at least 90% of the corpus in equities are treated as equity funds for tax purposes. Since Quant MF schemes are not ETFs, they will be taxed at par with debt funds.
Although the tax rate of FoFs is high, some portion can be set off by the fact that investors don’t have to get in and out of quant MF schemes to rebalance across schemes. Here, the rebalancing is done by Quant MF itself and people can hold on to this fund longer, said Karkera of Fisdom.
It is unclear, though, if the FoF will be permitted to invest in schemes that are not run by Quant Mutual Fund.
Recently, Quant Mutual fund filed papers for the launch of three thematic funds: Quant Consumption, Quant PSU, and Quant Commodities. The fund house manages more than ₹36,000 crore in 23 schemes. In the same period last year, it had assets under management of ₹14,000 crore. It has an SIP book of more than ₹650 crore and more than 5 million of investor folios.