CANARA ROBECO EQUITY TAX SAVER
After average performances in 2005 and 2006, the fund beat its category in 2007 and has done so every year since.
Anand Shah took over as fund manager in September 2008. He ensures a diversified portfolio, with no market-cap or sector bias. The fund invests in growth-oriented companies, with strong fundamentals. Shah has been successful in spotting opportunities and capitalising on them. In September 2008, he cut the exposure to metals, increased it within two months and finally offloaded it almost completely by December 2008. This, along with increased exposure to banking, helped the fund gain 15 per cent (highest in its category) in December.
The fund has evolved from a concentrated and risky offering to a more diversified one. Though allocation to a single stock has gone up to nine per cent, it is seen only in a few large-caps. Shah changes the market cap exposure according to market conditions. In 2010, he halved exposure to mid-caps and increased it to large-caps (currently at around 65 per cent). All said, the contra bets taken by Shah may impact the fund's performance if they don't play out well.
FIDELITY TAX ADVANTAGE
This is one of the two tax saving funds (out of 37) fall in the large-cap space. It shields investors better than its peers during market downturns. Since its launch, of the total of eight quarters in which its category has been in the red, the fund outperformed its peers in all these. On the flip side, one has to deal with middling performance during market run-ups.
The fund has no restrictions in terms of market-cap, sector or thematic bias. The focus is on bottom-up stock picking. However, the portfolio is biased towards large-caps and clearly towards financial services. The decision to buy or sell a stock is made on the basis of the fund manager's understanding of the growth outlook, fundamentals and valuations.
Fund manager, Sandeep Kothari goes by the balance sheet more than what the market is chasing. So, not surprisingly 17 of his holdings have been in the portfolio almost since inception. Despite a large-cap bias, the portfolio is highly diversified. Apart from Reliance Industries, allocation to a single stock has rarely exceeded six per cent of the portfolio. However, the fund takes numerous small bets. In December 2010, as many as 28 stocks accounted for less than one per cent of the fund's portfolio. The large-cap bias does not make it a very exciting offering. It does give stability but the concentrated sector bets , could hinder performance if they do not deliver.
FRANKLIN INDIA TAXSHIELD
The distinct large-cap bias makes it look dull during market rallies, but it shines during market downturns. Its ability to protect investors better than its peers during market busts has helped it build a competitive track record.
The fund follows a bottom-up stock selection process and invests across the market-cap range. The fund has been biased towards large-caps since launch. Exposure to small caps has never gone above 10 per cent. However, fund manager, Anand Radhakrishnan does not look at market-cap when investing and his only focus is on the stock. In market downturns, this one stands tall. In 2008, it was the third best performer among 29 funds, all the while averaging just five per cent in cash. However, during market rallies, it does not dominate.
A majority of the fund's portfolio is held for the long-term. The fund typically adopts a buy-and-hold strategy, in line with the medium-term and long-term views on the company. However, short-term trades are done in response to changes in market conditions or valuations. The portfolio looks slightly concentrated when compared to its peers. However, the risk is mitigated, with around three-fourth of its assets in large-caps. The fund’s occasional concentrated sector bets could impact its performance if sector fails to rally.
