ICICI Prudential Tax Plan

ICICI Prudential Tax Plan is managed by Chintan Haria. The fund has been consistently giving better returns than the average returns of funds in its portfolio. This is a good fund to hold on to for the long term. Investing in this fund enables the investors to avail the income tax rebate, as permitted from time to time.

Where does ICICI Prudential Tax Plan invest your money?

ICICI Prudential Tax Plan is a multi cap fund which means most of your money will be invested in large and small companies. And just to give kicker returns the fund has some exposure in mid cap companies as well. Large cap companies tend to be stable compared to mid cap and small cap companies. It has 63.12% exposure to large sized companies and 18.16% exposure to mid sized companies and 18.62% is invested in small sized companies.

Suitable for what?
  • Saving on tax outgo
  • Child's education
  • Child's marriage
  • Planning for retirement
Not suitable for what?
  • Creating wealth
  • Short term needs
  • Lifestyle needs
How has ICICI Prudential Tax Plan performed in the past?

If you had invested Rs 1 lakh when the fund was launched in Aug 1999, your value of investments would be around Rs 15.26 lakhs. If you had invested Rs 1 lakh five years back it would have become Rs 1.42 lakhs. The performance has been better than other funds in this category. The fund has been giving around 7.38% returns to investors who have stayed invested for last five years.

Assume you had invested Rs 10,000 every month in ICICI Prudential Tax Plan through SIP for the past 5 years today you would have around Rs 8.45 lakhs.

How will ICICI Prudential Tax Plan perform in the future?

Needless to say no one can predict the future of markets. We have firm belief in the future prospects of the Indian economy. If the Indian economy grows at 9% then the leading companies tend to do well. When the companies do well their stock prices follows their performance. So if you expect the economy to grow at 8% then you can expect top performing mutual funds to give you returns in excess of 14%.

Mutual fund schemes that have exposure to mid sized companies tend to show results when their bet on few companies comes true. We advise you to avoid too much of star gazing and future prediction. Be reminded that equities are one of the asset classes that have the potential to beat inflation. Your aim for core portfolio should be to beat inflation.

How much to invest?

Minimum one time investment is Rs 500 and minimum SIP is Rs 500 per month. You can make ICICI Prudential Tax Plan as part of your core portfolio. Core portfolio is the investment that is made for your basic goals and makes up about 70% of your investment portfolio. Do not make the mistake of investing in too many mutual fund schemes. At any point of time do not have more than two mutual fund schemes in your core portfolio.

Our recommendation for fresh investment
Recommended
Our recommendation for existing investment
Recommended
When to enter?

Now! There is no good time to invest rather than now. Do not try to time the market and especially so if it is an SIP. Do not follow news channel and other experts to know the right time to invest. In the long run it does not matter. Mutual fund is unlike a stock where you are looking at the right price. This job will be done by the mutual fund scheme manager. If you have planned your investments and decided on the amount you want to invest do not think further, just go ahead.

When to exit?

There is a lock-in period of 3 years on this fund, which means that you cannot sell this fund within 3 years of your purchase date. Withdraw when your goals are closer to achievement. Do not remove the money when the markets go up or down. Do not panic. Stick to your goals.

How frequently you need to monitor the performance?

Once you invest in the fund do not get into the habit of checking the NAV daily or monthly. Review the performance once a year. Too much attention is not good.

What are the charges applicable?

A onetime fee of Rs 100 is charged on investments over Rs 10, 000 made through distributors. If you are a first time investor in mutual funds an additional Rs 50 is charged to cover KYC expenses. This is deducted from your investment and can be skipped if you buy directly from the mutual fund via their website or offices.

No exit load applies for units withdrawn in this scheme. Expense ratio of ICICI Prudential Tax Plan is 2.48%. This is charged to recover the fund management company’s expenses on securities’ transactions, commissions, registrar fees, etc. Your mutual fund returns will be total returns less expense ratio.

What are the tax implications?

The returns in a mutual fund are absolutely tax free, provided you did not withdraw within 1 year. ICICI Prudential Tax Plan qualifies for sec 80C ELSS benefits, which means you can invest up to Rs 1 lakh a year in this fund and deduct the amount from your gross total income for computing income tax.

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