HDFC TAXSAVER
After beating its peers almost every year (barring 1999 and 2002) in its 14-year history, the fund found itself in the fourth quartile in 2007. That was the only year when it underperformed the S&P CNX 500. But the very next year, it was back as a top-quartile performer. It curtailed its fall to a lower level in 2008 and delivered close to 100 per cent return in 2009.
| Period | Return* (%) |
| 3-month | -6.19 |
| 6-month | -7.41 |
| 1-year | 12.75 |
| 3-year | 14.23 |
| 5-year | 12.41 |
| *Returns as on March 30, 2011 | |
The mandate is not limited across market caps or sectors. Although currently over half the fund’s assets are into large-caps, it has not always been the case. It is among the few funds which have invested in the Indian Depository Receipts of Standard Chartered Plc and is among the few not holding Reliance Industries in its portfolio. Even in its sector allocation, the fund is not wary of contrarian moves. In 2009, when other funds chased energy, this fund had just 10 per cent allocation to the sector.
The rising asset base has led to an increase in the number of stocks to 55, from around 40 stocks (end 2007). However, the fund has a long tail of stocks (currently 23), each with an allocation of less than one per cent. They collectively account for close to 10 per cent of the fund's portfolio. With the top five holdings accounting for 22 per cent, the fund looks well diversified. Allocation to a single stock has rarely exceeded seven per cent after Kulkarni took over in November 2006.
ICICI PRUDENTIAL TAX PLAN
In its history of around 11 years, the fund has delivered mixed performances. The allocation to mid-and small-caps led to some exceptionally good years, but was also hit harder during the market downturns. In 2009, it grabbed the top slot with a return of 112 per cent.
| Period | Return* (%) |
| 3-month | -6.76 |
| 6-month | -5.49 |
| 1-year | 10.14 |
| 3-year | 14.15 |
| 5-year | 10.22 |
| *Returns as on March 30, 2011 | |
The portfolio is a mix of large- and medium-sized stocks. This fund is not a large-cap one, though there will be periods when such stocks dominate.
In 2007, its sector moves worked against it. With around a fifth of its portfolio in FMCG and healthcare, it remained underweight in metals and energy. This was because the fund manager felt stocks in the oil and gas sector were overvalued, while that of FMCG and pharma were undervalued. But when the downfall took place in 2008, the fund’s fall of minus 56 per cent was around the category average. The sector bets and increased exposure to large-caps helped; the cash and debt exposure averaged around just six per cent. So, when the market began to rally in 2009, the fund was in a good position to hop on to it.
The portfolio is well diversified across 65 stocks, with the top five accounting for 22 per cent of the portfolio. The individual sector allocation is restricted to 20 per cent and does not exceed five per cent for individual stock holdings, barring a few large-cap names. Half the portfolio is currently in large-caps, aggressive mid-cap and small-cap bets also take place. As a result, it can get hit harder during market downturns.
RELIGARE TAX PLAN
This fund has made its mark in a short period.
| Period | Return* (%) |
| 3-month | -6.17 |
| 6-month | -7.91 |
| 1-year | 10.51 |
| 3-year | 11.55 |
| 5-year |
- |
| *Returns as on March 30, 2011 | |
It provides good downside protection capabilities, accompanied with decent returns during markets rallies. This will reward investors in the long run.
The fund invests across market capitalisation and sectors, utilising a bottom-up approach. With an allocation of over 60 per cent to mid- and small-caps, and a tightly packed portfolio of around 35 stocks, one would have expected the fund to be thrashed in the market downturn of 2008. But its fall of around 50 per cent was six per cent below the category average and five per cent less than the BSE 100, that too without a high cash exposure. Stock picking made all the difference. Of the 38 stocks which appeared for six months or more in the fund’s portfolio in 2008, 16 experienced a fall lower than the Sensex. The fund’s focus on bottom-up selections leads to quality picks. Momentum plays are avoided, which may result in subdued returns during market rallies.
The fund follows a multi-cap strategy. Although benchmarked against the BSE 100, the base universe is the BSE 200, to which stocks in the CNX Midcap index are added. A few handpicked companies from the BSE Small Cap and BSE PSU indices are also considered. This universe is reviewed every quarter. Aggressive sector bets, too, are not unusual for the fund.
