CANARA ROBECO EQUITY TAX SAVER
This is an all-weather fund and the best-performing, with an annualised return of 22 per cent over the five-year period ended December 21. The fund has not only impressed during the market rallies but stood apart with its excellent downside protection capabilities. A lot of the performance is reflected from September 2008, five months after the new fund management team headed by Anand Shah joined.
“We focused on the domestic consumption theme as we saw the potential of rising incomes amongst Indians and their ability to spend more. We bet on financials, utilities, pharmaceuticals,” explains Shah.
The fund manages Rs 220 crore in its portfolio, that gives it the necessary agility to make quick shifts and grab opportunities. When the category had a 23 per cent fall, this fund limited losses to 11 per cent in the quarter ending December 2008. Again, in March 2009, when the markets were entering the bull run, Shah was able to quickly deploy cash upto 97 per cent, resulting in the fund outperforming the category by eight per cent.
| Period | Return (%) |
| 3-month | -4.66 |
| 6-month | 9.40 |
| 1-year | 26.09 |
| 3-year | 9.48 |
| 5-year | 21.83 |
The fund manager frequently invests and sells few stocks in the portfolio, using a target price exit strategy. For instance, Reliance Industries, Axis Bank and Zee Entertainment Enterprises are stocks in which the fund manager has deployed this strategy, which has been profitable. However, Shah argues these instances to be exceptions, as he normally invests with a long-term investment horizon. The fund is well diversified, with 52 stocks in its portfolio that makes it stable.
FIDELITY TAX ADVANTAGE
This fund follows a go-anywhere strategy, with no market-cap, sector and style bias. However, on close analysis, there is a large-cap bias in the portfolio. The large-cap exposure has ranged from 57 to 70 per cent and has averaged 64 per cent since the fund’s launch. And, despite claims of no sector bias, there is preference for financial services.
The 20 per cent allocation to this sector since inception stood at 27 per cent in September. This has resulted in the fund being a stable performer, with an average performance during market rallies and has managed to shield investors during market falls.
The fund has largely stayed away from metals and construction, missing out on the 2007 and 2009 rally in these sectors. Fund manager, Sandeep Kothari attributes the absence of metals to high valuations based on balance sheets of some of the larger players.
More From This Section
The fund largely follows a buy and hold strategy, with seven stocks, Larsen & Toubro, Reliance Industries, BHEL, HDFC Bank, ICICI Bank, SBI and Infosys Technologies finding a place in the portfolio since inception.
| Period | Return (%) |
| 3-month | -1.48 |
| 6-month | 13.54 |
| 1-year | 31.73 |
| 3-year | 7.96 |
| 5-year | - |
The large-cap tilt and higher allocation to the financial services sector makes the fund sturdy, but it also means that investors have to be content with an average performance during market rallies.
RELIGARE TAX PLAN
A relatively new fund, it has managed to provide downside protection to investors, with good returns during market rallies. This is a well-diversified fund, that currently has 57 stocks in its portfolio, with a large-cap skew accounting for 62 per cent allocation.
The fund does take an aggressive stand from time to time. For instance, HPCL accounted for nine per cent allocation in December 2008, which Vetri Subramaniam, head-equity funds, justifies as in the context of the overall sector exposure and was manageable risk, relative to the benchmark. Though the fund’s benchmark is BSE 100, the fund considers a universe of 306 stocks and according to the fund manager, the base universe is the BSE 200, to which companies from the CNX Midcap Index get added.
The fund manager stays away from the momentum game and avoids getting into cyclicals, which may check its return potential during market rallies.
| Period | Return (%) |
| 3-month | -3.13 |
| 6-month | 10.19 |
| 1-year | 25.31 |
| 3-year | 6.63 |
| 5-year | - |
Stock picking is the driver for the fund’s superior performance. For instance, stocks such as Nestle India, HPCL and ITC were among the 38 stocks in the portfolio for six months or more and yet experienced a fall lower than that of Sensex in 2008. The fund has low cash reserves, which can limit its ability to invest in opportunities that may arise.