SEBI allows mutual funds to launch passively-managed ELSS schemes

Mutual fund investors will soon get one more option to make tax-saving investments. The Securities and Exchange Board of India (SEBI) on May 23 allowed mutual funds to launch equity-linked savings schemes (ELSS) as passively-managed funds as well.

SEBI wants such a scheme to be based on an index that comprises the top 250 companies in terms of market-capitalisation.

However, there is one caveat. A mutual fund can have either an actively-managed ELSS scheme or a passively-managed one, but not both. So, this will allow new-age fund houses that are focusing on passive schemes, to launch a passively-managed ELSS fund.