IDFC Tax Advantage (ELSS) Fund: Tax savings with long-term growth

Launched in December 2008, IDFC Tax Advantage (ELSS) Fund has featured in the top 30 percentile of the ELSS funds category of CRISIL Mutual Funds Ranking (CMFR) for four consecutive quarters through December 2021. Daylynn Pinto has been managing the fund since October 2016. The month-end assets under management of the fund stood at Rs 3,428 crore as of February 2022, up from Rs 1,992 crore in March 2019.

The investment objective of the scheme is to seek to generate long-term capital growth from a diversified portfolio of predominantly equity and equity related securities.

Trailing returns

The fund has outperformed the benchmark (S&P BSE 500 TRI) and its peers (funds ranked under the ELSS category in December 2021 CMFR) in the past 1-, 2-,3-,5-, 7- and 10-year trailing periods.

To put this into perspective, Rs 10,000 invested in the fund on December 26, 2008, i.e. inception of the fund, would have increased to Rs 92,450 on March 10, 2022, at an annualised rate of 18.34 per cent, compared with the category and the benchmark, which would have grown to Rs 79,673 (17.01 per cent per annum) and Rs 77,530 (16.77 per cent per annum), respectively.

A systematic investment plan (SIP) is a disciplined mode of investing offered by mutual funds, through which one can invest a certain amount at regular intervals. Monthly investment of Rs 10,000 for the past 10 years in the fund, totalling Rs 12 lakh, would have increased to Rs 29.02 lakh (17.01 per cent annualised returns), compared with Rs 25.72 lakh (14.74 per cent annualised returns) in the benchmark as on March 10, 2022.

Portfolio analysis

In the past three years, the fund took exposure across market capitalisation, with predominant allocation to large-cap stocks (averaging 51.46 per cent). Allocations to mid-cap and small-cap stocks averaged 18.94 per cent and 26.02 per cent respectively, during the period.

The portfolio was diversified across 25 sectors. Banks dominated with average allocation of 19.14 per cent, followed by software (11.06 per cent), pharmaceuticals (6.7 per cent), finance (5.92 per cent), and construction project (5.84 per cent).

During the period under analysis, the fund took exposure to 117 stocks and held 25 consistently. Deepak Nitrite, ICICI Bank, Infosys and Mastek were the key contributors to its performance and were also consistently held.