HDFC Mutual Fund has come up with a unique scheme to support needy and underprivileged Cancer Patients by donating the money to Indian Cancer Society (ICS) or other eligible institutions. A total of 3168 patients from 28 states have been benefited through this scheme. A Governing Advisory Council (GAC) meets every fortnight to identify the genuine cases for financial aid
This scheme which is open for investment until 24 Mar 2017 is the 3rd in the series of funds collected by HDFC MF for Cancer Treatment, the earlier 2 being 2011 and 2014. This is closed ended fund for a period of 1136 days and premature exits will not be possible. Typically, when 1 fund house launches a product, its copied by all other fund houses. However, HDFC MF is the only fund house that runs a fund for charity purpose, since 2011. The Scheme offers 2 types of funds for the investors,
Debt – Income generated through debt/money market instruments and Government Securities
Arbitrage – Income generated through arbitrage opportunities between cash and derivative markets
The minimum investment is 50,000/- and multiples of 1,000/- thereafter.
Now comes the interesting feature of the fund.
The funds collected by HDFC in both the Debt and Arbitrage schemes will be deployed to generate income. The Scheme has only dividend pay-out option and dividends are paid every 6 months, subject to availability of distributable surplus.
The Investors have 2 options:
50% Dividend Donation Option – Under this Option, Investors can donate 50% of the dividend amount, they earn and the rest shall be paid to them.
100% Dividend Donation Option – Under this Option, Investors can donate 100% of the dividend amount.
In addition to this, the dividends donated by the investors is eligible for Income Tax deduction as per Sec 80G. To claim this as a part of IT filing, a certificate with PAN of the investor will be provided.
HDFC MF will not charge any fund management expenses for this scheme and also match the contribution of Investors donation through dividends
At the end of 1136 days the scheme will be closed and the principal will be returned back to the investor.
Dividends paid by debt funds are taxed at 28.4% (Dividend Distribution Tax, DDT) while Arbitrage fund enjoys equity status and hence Tax Free. So, even if is we get a lesser return through Arbitrage, the taxation will make a difference making Arbitrage fund attractive over debt
Most of our clients know that we do not recommend a product that we will not buy and preach only what we practice. So, our contribution is definitely there for this fund.
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