Alliance Capital Tax Relief `96 is a tax saving equity fund. It is almost fully invested in equities. The fund was launched in December 1995 as a closed-end scheme and was converted into an open-end fund in July 1999. It is available to the investors at an entry load of one per cent.
Performance: The fund has been a blockbuster, with a total annualised return of 70 per cent since its launch. With a NAV at Rs 71.31, an initial investor's money has grown almost 600 per cent in absolute gain in less than four years. The fund's growth looks all the more astounding as the fund was launched when the market was in a strong bear grip, which prevailed till 1998. The fund has been able these returns on a small asset base, which allowed for an aggressive strategy and with concentrated bets on few stocks. Till 1998, the fund was largely into select software and FMCG stocks. In its three and half-years tenure, the fund posted negative returns in 4 quarters and under-performed the benchmark in only two quarters.
Given its small size, the fund shuffles its portfolio radically. For the quarter ended September 1999, it had diversified its portfolio - increasing positions in telecom, auto, chemical stocks and reduced its exposure in FMCG by 15 per cent to 9.4 per cent and media stocks by 12.2 per cent to nil. The fund has increased its positions in infotech stocks from 9.5 per cent to 29.6 per cent and in pharma stocks from 4 per cent to 13.2 per cent. Following its aggressive portfolio strategy, the has more than adequately rewarded for the volatility over the past four years. Consider the following statistics to gauge its volatility. The funds best month was March 1999 (36 per cent) and worst month was June 1998 (-23 per cent). In the past quarter fund has gained 49 per cent outperforming the BSE 200 by 24 per cent. After a lock-in of three years was over in March 1999, it is getting smaller with outflows.
Outlook: The fund has the potential to give significant returns, despite the already ruling high NAV. It could prove highly rewarding investment with a tax break of 20 per cent rebate with a 3-year lock. meta name="description" content="Now that the Indian economy has begun to open up -- the latest case being the insurance industry -- attention has inevitably turned to the problem of regulating competition.">
