ELSS funds based on Index

Do we have any ELSS fund based on any index - Nifty 50 or midcap or small cap Index ?

@Bhuvanesh @siva

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Unfortunately, no.

Thank you @Bhuvanesh
Any idea why AMC are not motivated to launch index based funds.
@siva

Could you post this question to any AMC s which is in contact with Zerodha.

The average expense ration of actively managed ELSS funds is 1.2%. The average expense ratio of an index fund is 0.1%-0.2% Why would an AMC lose 90% margins on a product? :slight_smile:

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Thank you for insight.
But AMC would need not do any reasearch . That would save money.

They have to just duplicate. Hence reduction in expense Ratio.

Not nearly enough as they would lose :slight_smile: To simply put there are no incentives for them to do so.

I too had wondered why there is no index-based ELSS fund.

Earlier, I had mentioned that since ELSS funds have 3-year lock-in, the effective TER is 3-times.
https://tradingqna.com/t/effective-ter-of-elss-funds-is-more-than-you-think-of-it/

If you go to a MF distributor, the first thing they would ask you to do is invest in ELSS fund and because of 3-year lock-in they would keep on getting the guaranteed commission. Also regular ELSS funds have higher TER. So it’s in the self interest of the distributor to ask you to do so.

More so why one should go direct and also factor TER while choosing an ELSS fund (but not the only criteria).

I have been tracking the TER changes of ELSS funds since last year. Until recently Mirae Asset Tax Saver Fund had the lowest TER in ELSS category 0.2% and then slowly it started increasing, current TER being 0.64%.

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There used to be a fund just as you have wished for:- Franklin India Index Tax Fund.
As the name suggests it was an index fund with tax advantage, but unfortunately it was discontinued as on Sep 2011 onward and now merged with Franklin India Index Fund.

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AMC job is to sell and they’ll do whatever to do so.