India's AMCs fall as govt plans to tax long-term debt mutual funds

Aditya Birla Sun Life Amc

27/03/2023 06:30

** Asset Management Companies in red with HDFC AMC  HDFA.NS 
down 2.4%, UTI AMC  UTIA.NS  down 2.3%, and Aditya Birla Sun
Life AMC  ADIE.NS  down 4.3%
    ** India's government on Friday passed amendments to tax
benefits from long-term debt mutual funds
    ** Mutual funds with less than 35% invested in domestic
equities are proposed to be treated as short-term, amendments
say
    ** CLSA analysts says move is a negative for mutual fund
industry having non-liquid AUMs of ~8 trillion rupees, which
constitute 19% of AUMs, as the relative attractiveness due to
tax arbitrage goes away
    ** Following these changes, no tax arbitrage left across
debt instruments - CLSA
    ** "Indexation benefit from debt mutual funds has been
removed and this could reduce inflows in debt mutual funds and
benefit bank deposits and direct bond investments from high
net-worth individuals (HNI) and family offices," says Nagesh
Chauhan of Tipsons Group    
    ** HDFA, UTIA, and ADIE were down 4%, 4.8% and 4.5%
respectively on Friday


 (Reporting by Aleef Jahan in Bengaluru)
 ((aleefjahan.cs@thomsonreuters.com))