| Prudential ICICI Tax Plan has an impressive record of picking the right stocks at the right time.
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| Launched in August 1999, Prudential ICICI Tax Plan has been a fairly stable performer. Being an equity-linked savings plan, investments in the fund are subject to a three-year lock in.
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| The fund charges an entry load of 2.25 per cent for investments up to Rs 5 crore. The fund has been volatile of late. But it provided category-beating returns of 36.46 and 150 per cent in 2004 and 2003 respectively.
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| A portfolio dominated by small- and mid-caps did the trick for the fund in 2004 (it maintained 88 per cent exposure to the two types of stocks during the year).
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| The strategy proved disappointing in Q1 FY05 when the stock markets turned, and the fund lost 18.36 per cent against the 5.44 per cent loss of its average peer. But the approach helped it survive the May mayhem, losing just 3.23 per cent in Q2 while the category was down over 9 per cent.
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| Better selection of stocks always enhanced value for the fund. Smart picks like Aban Loyd, Blue Dart, BOC India, KPIT Cummins and Hindustan Zinc have rewarded it handsomely. Aban Loyd has been among its top five holdings since December 2003, and has surged 130 per cent since then.
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| Similarly, a high exposure to KPIT Cummins resulted in superlative gains in 2004 as the stock price doubled during the year.
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In 2003, the fund invested in quite a lot of smart mid-cap picks with stocks like Eicher Motors, Rane Engine Valves and Ucal Fuel Systems being major gainers.
| Top holdings | | As on Feb 28, 2005 | Value
(Cr) | Net
Assets
(%) | | Aban Loyd Chiles Offshore | 5.27 | 9.93 | | BOC India | 3.46 | 6.51 | | SBI | 3.37 | 6.35 | | Exide Inds | 2.91 | 5.48 | | Crompton Greaves | 2.66 | 5.01 | | Taj GVK Hotels & Resorts | 2.66 | 5.01 | | Monnet Ispat | 2.41 | 4.54 | | KPIT Cummins Infosystems | 2.36 | 4.45 | | Gillette | 2.13 | 4.01 | | Subex Systems | 2.04 | 3.85 | | Ucal Fuel Systems | 2.01 | 3.79 | | IBP Co | 1.88 | 3.55 | | Hindustan Zinc | 1.74 | 3.27 | | P&G Hygiene & Health Care | 1.58 | 2.98 | | Rane Engine Valves | 1.45 | 2.72 | | United Phosphorus | 1.35 | 2.54 | | Ultramarine & Pigments | 1.31 | 2.46 | | Monsanto India | 1.30 | 2.46 | | Blue Dart Express | 1.27 | 2.39 | | Sundaram Finance | 1.24 | 2.34 |
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| In 2002, it underperformed the category as it had a low exposure to mid-caps which did better than large-caps. But it did well in minimising losses in 2001.
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| The fund manager takes long-term calls and bets on small- and mid-caps. The fund's stock-picking has been impressive. Volatility remains an issue but it could even out over three years. It deserves a look.
-Value Research
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Returns in % as on March 31, 2005
Liquid funds and floating-rate funds continue to head the table in terms of returns among debt fund categories. The low average maturity in these funds has helped fund managers tide over volatility.
Debt funds
Average category returns (%) | | | 1 month | 1 year | | Liquid funds | 0.44 | 4.82 | | Floating rate funds | 0.42 | 4.79 | | Gilt - short term | 0.29 | 2.55 | | Gilt - medium term | 0.31 | 1.26 | | Income funds | 0.28 | 0.81 | | Gilt - long term | 0.22 | -0.67 | Clarification
In the performance table for ELSS on page six of The Smart Investor issue dated March 28, 2005, the one-year return of Sundaram Tax Saver was inadvertently mentioned as -15.61 per cent. The apparent negative return is because of the dividends which have already been realised by investors. The fund actually posted a one-year return of 67.65 per cent for the 12-month period (till February 28, 2005) under consideration.
-Editor |
Income funds continue to lag and with global interest rates expected to inch upwards, the outlook on these funds is not good either.
Leaders
Monthly income plans | | | 1 month | 1 year | | FT India MIP | -0.03 | 8.45 | | HDFC MIP - long term | -0.15 | 8.29 | | HDFC MIP - short term | 0.43 | 7.53 | | Deutsche MIP Plan A | 0.14 | 7.47 | | UTI MIS - Advantage Plan | -0.49 | 7.31 | | Prudential ICICI MIP | -0.06 | 7.21 | | Principal MIP Plus | -0.11 | 7.00 | | DSPML Savings Plus Moderate | -0.38 | 6.89 | | LIC MIP | -0.7 | 6.61 | | Sundaram MIP | 0.21 | 6.12 |
As is evident from the table, average MIP returns have been better than that of any debt category, thanks to their higher exposure to equities.
Funds with the biggest exposure to equities (more than 20 per cent) like FT India MIP and HDFC MIP schemes are the top performers in the past one-year in the MIP category.
Laggards
Monthly income plans | | | 1 month | 1 year | | UTI Monthly Income Scheme | -0.13 | 2.55 | | Alliance MIP | -0.14 | 3.25 | | Tata MIP Plus | -0.99 | 3.57 | | JM MIP | 0.32 | 4.02 | | ING Vysya MIP Plan B | -0.24 | 4.10 | | SBI Magnum MIP | 0.08 | 4.21 | | HSBC MIP Regular | -0.36 | 4.26 | | Tata Monthly Income Fund | -0.22 | 4.82 | | Principal MIP | 0.17 | 5.07 | | Birla MIP | 0.1 | 5.61 | | Source: www.mutualfundsindia.com |
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