When it comes to investing, taxes aren’t just fine print—they directly impact how much of your money stays with you. Traditional avenues offer stability but aren’t always tax-efficient. As a result, net returns may not keep pace with inflation in the long run.
If you’re looking for a more strategic way to invest—one that offers some growth potential, relative stability, and tax efficiency —Bajaj Finserv Equity Savings Fund may be worth considering.
The scheme, currently in its New Fund Offer (NFO) period (July 28, 2025 – August 11, 2025) combines limited equity exposure with lower-risk components like debt and arbitrage strategies, while retaining equity-like tax treatment.
Portfolio structure and allocation
The Bajaj Finserv Equity Savings Fund follows an actively managed approach and allocates its portfolio as follows:
Equity: This portion of the portfolio (ranging between 10% to 40% in normal market conditions) will invest in stocks that are selected using a Growth at Reasonable Price (GARP) approach. The measured equity allocation intends to provide some long-term capital appreciation while limiting exposure to volatility.
Arbitrage: The arbitrage component will seek to take advantage of price differences in the market to generate the potential for low-risk returns and navigate volatility.
Debt: The fund invests will invest in high-quality fixed income instruments, such as AAA-rated and sovereign securities, which can create income generation potential and add relative stability of the portfolio.
The combination of these three components is designed to create a portfolio that can participate in market-linked growth potential while maintaining lower sensitivity to market fluctuations.
Equity tax treatment despite lower risk exposure
Despite a relatively modest allocation to stocks, equity savings funds are taxed as equity-oriented mutual funds, provided their overall equity and arbitrage exposure meets the regulatory threshold of 65%.
This gives the fund the following tax profile:
Short-term capital gains (units held for less than 12 months) taxed at 20%
Long-term capital gains (units held for more than 12 months) taxed at 12.5% beyond the ₹1.25 lakh annual exemption
For investors in the 30% tax bracket, this structure can potentially lead to relatively more efficient post-tax outcomes than traditional debt mutual funds and bank deposits, which are taxed at the investor’s income slab rate.
Note: The tax rates given here do not include cess and applicable surcharge, if any.
Volatility management
One of the key considerations for conservative investors is the behaviour of a fund during market downturns. Given the limited equity exposure and the cushioning provided by the debt and arbitrage components, equity savings funds can experience smaller drawdowns than pure equity funds during periods of market correction.
This can make them suitable for:
Investors transitioning out of full-equity positions
Individuals seeking to maintain some market exposure with lower volatility
Those looking to park funds temporarily while awaiting other investment opportunities
Moreover, there is no lock-in period, which can be beneficial for investors seeking liquidity.
Inclusion of REITs and InvITs
The Bajaj Finserv Equity Savings Fund will also include a limited allocation to REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts). This adds another layer of diversification and exposure to alternative assets with the potential for asset-backed income.
Who may consider investing?
The Bajaj Finserv Equity Savings Fund may be considered by investors who:
Prefer lower-risk investments
Are comfortable with some equity exposure but seek lower portfolio volatility
Are in higher tax brackets and considering tax efficiency as part of their investment decisions
Investors can purchase units at the offer price of Rs. 10 per unit during the NFO period. The fund will reopen for subscription within five business days of allotment date , when units can be purchased at the applicable Net Asset Value.
Investments in the Bajaj Finserv Equity Savings Fund start at Rs. 500 for lumpsum and Rs. 500 and above for SIP (with minimum six instalments). To know more about the fund or to invest, visit www.bajajamc.com. The website also offers free tools such as SIP, lumpsum and step up SIP calculator that can help you plan your investments.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
The content herein has been prepared on the basis of publicly available information believed to be reliable. However, Bajaj Finserv Asset Management Ltd. does not guarantee the accuracy of such information, assure its completeness or warrant such information will not be changed. The tax information (if any) in this article is based on current laws and is subject to change. Please consult a tax professional or refer to the latest regulations for up-to-date information.
Disclaimer: This article is published in association with Bajaj Finserv and not created by TNM Editorial.