Ability to recover from slippages

FUND ANALYSIS: Franklin Taxshield

This tax-saving fund has been at the top of the pack. Following the changes in its strategy after June 2006 quarter, the fund is making good gains.

In the long term, it has always generated returns, outperforming the category. For this reason, the fund, which slipped to 3-star rating in April 2005, recovered well to get a four-star rating in July 2006.

The fund's concentration is mainly in large-cap stocks. Small-caps, which occupied up to 8 per cent of its portfolio till a year back, are nowhere to be seen now. The fund started reducing its small cap holdings from February 2006. After June, the fund completely exited small caps and got busy accumulating large cap stocks.

Among sectors, the fund increased its exposure to automobiles to 17.23 per cent, which now occupies the largest share of its portfolio. It is followed by technology (14.74 per cent) and healthcare (9.31 per cent) funds.

The stake in basic engineering has gradually decreased from a high of 18.48 per cent in October 2006 to 7.07 per cent in December 2006. The fund began rationalising its exposure to techs as well, when it stood at a high of 20 per cent of assets under management in July 2006.

Bajaj Auto is the top holding of the fund. Stocks such as L&T, Marico, Mico, Nestle, and Maruti have retained their place in the funds portfolio over a considerable period of time.

Historically, the fund has generated outstanding results "" an annualised return of 39.04 per cent since launch is a testimony to this.

The fund has displayed its ability to protect the slippages well. Post -May crash, the fund lost 13.65 per cent in June quarter, less than the average category's loss of 15.35 per cent. This makes it as compelling option in tax planning category.