Saviours in market downturn

CANARA ROBECO EQUITY TAX SAVER
This fund gained a foothold after the Robeco group bought stake in Canbank Mutual Fund. It aims at a balanced portfolio of large- and mid-cap stocks with a 'growth' style of investing. The equity allocation is ranged between 80-100 per cent.

After a good show in 2007, it fell the least in 2008 despite the cash/debt allocation averaging at 11 per cent (peak at 21 per cent). This is well within its investment mandate. It succeeded on investing in the right companies and the fund manager aligned the portfolio to capitalise on domestic demand recovery. This was based on the fiscal stimulus, monetary easing and strength of favourable demographics.

 

The scheme rallied in 2009 due to its banking allocation, increased mid-cap exposure and bets on the likes of L&T, BHEL, GAIL, Gujarat State Petronet, HPCL and BPCL. This year, also, it has beaten the category average by a huge margin.

A small asset base helped the scheme take advantage of flexibility to move in and out of sectors/stocks. It buys companies with secular growth opportunities and an objective of staying invested for longer periods of time.
 

Trailing Returns
Period	Return (%)
3 Months	5.27
6 Months	11.36
1 Year	47.64
3 Year	16.73
5 Year	28.04

The fund focuses on companies with superior growth. Though it does not shirk smaller fare, the risk-reward profile has led to a large-cap tilt. Excellent performance numbers without undue risk and a compact, diversified portfolio makes it a strong contender.

SUNDARAM BNP PARIBAS TAX SAVER
This fund has performed consistently despite frequent change of fund managers. Over time, it has either beaten the category average (seven years) or performed in-line (two years). But, 2009 turned out to be a blip in its history. It delivered 72 per cent, making it a bottom quartile performer, after being in the top (2008).

The fund invests in stocks across market-cap, with a 3 to 5-year view, sizeable allocation to large-caps, which is the anchor of the portfolio.

Deep cash calls came to its rescue in 2008. There were times when the equity exposure dropped to 63 per cent (the balance being in debt+cash). This helped it show tremendous resilience and shed only 47.58 per cent (category average = minus 56 per cent). The low equity exposure continued in 2009. It averaged at 76 per cent in the first three months and once the rally began, the fund rapidly picked stocks and starting April 2009, its equity exposure rose to 94 per cent. Yet, it delivered only 72 per cent in 2009 (category average = 82 per cent). Even the last six months it has not been very impressive when compared to the category. But, it has built a competitive track record over the long run; 5-year annualised return at 24 per cent.
 

Trailing Returns
Period	Return (%)
3 Months	-0.48
6 Months	-4.2
1 Year	29.08
3 Year	12.13
5 Year	23.66

Despite showing a preference for mid-and small-caps in its earlier days, it now has a distinct preference for large-caps. This did not change in 2009, even when smaller companies rallied. The fund may look slightly concentrated with 58 per cent allocation to the top three sectors over last one year (category average = 43 per cent) but single stock exposure has rarely crossed six per cent.

FRANKLIN INDIA TAXSHIELD
It maintains a diversified equity portfolio across sectors and market caps.

It tends to maintain a relentless focus on long-term and ignores momentum to a large extent. So, sectors on a high - metals and construction in 2007 - will not lead the fund to buy the stocks even at the cost of lower returns. In 2009, the FMCG allocation began to drop towards the year-end, despite the market rallying from March. This again shows the manger sticks to his convictions and does not get swayed by the market.

In 2008, it was the third-best performing fund in its category. Instead of resorting to aggressive cash calls (averaged 5 per cent), the fund increased its exposure to FMCG and healthcare. The distinct large-cap bias came to its rescue. Though in a rising market (2009), the fund was an average.

The majority of the portfolio is held for long and some favourites (Infosys, L&T, Grasim Industries, RIL, Cummins India, Marico) have been around for a long period. The fund takes small positions in larger number of stocks, which are churned often. Of the 52 stocks, 22 have less than one per cent allocation (total 15 per cent).
 

Trailing Returns
Period	Return (%)
3 Months	-1.27
6 Months	4.36
1 Year	35.13
3 Year	10.08
5 Year	20.23

An average in rising markets, it made its mark in the downturn. You will here see a portfolio with fundamentally strong stocks that reward investors in the long run. Its 3-year annual return (10.08 per cent), is ahead of the category average (6.52 per cent).