SUNDARAM BNP PARIBAS TAXSAVER
Launched in 1999, the fund has looked average during market run-ups, but an impressive performance during downturns has translated into a competitive long-term track record.
The fund manager keeps moving in and out of cash. Like in September 2008, it was 28.75 per cent of the portfolio; in the next month, it was brought down to 8.84 per cent, to again move to 36.53 per cent the following month. It averaged around 24 per cent for the three months ending March 2009. As markets started rising from March 9, the fund manager reduced it to six per cent in April 2009 and since then, it has never gone above this level.
The fund has no capitalisation bias. It started as a large-cap one, but tilted towards mid and small-cap stocks. Till mid-2007, the fund had been biased towards lower-cap stocks and only then did the exposure to large-caps move above 50 per cent of the portfolio. Between 2008 and August 2009, it has averaged around 68 per cent.
The fund looks quite opportunistic: it is not rare to see it move in and out of sectors in a short span of time. Although, with the top three sectors accounting for 53 per cent, it looks slightly concentrated on its sectoral bets. The fund currently holds 40 stocks; however, in 2007, it had 81 stocks.
The fund's performance in both falling as well as rising markets makes it a good pick among the tax-planning funds.
This fund's performance can be broken into three phases: 1994 to 2002, 2003 to 2006, and after 2006. Launched in March 1993, the fund turned in close to category returns for the first three years. In 1999, it delivered a mesmerising 330 per cent (category average: 209 per cent), but underperformed its category significantly for the five years spanning 1997 and 2002.
From 2003 onwards, it was on steroids. After an excellent performance that year, it was the best performing fund in its category till 2006. However, since 2007, the fund has turned into a middle-of-the-road performer. In 2007, it put in an average show, with returns of 55.27 per cent against the category's 57.96 per cent.
Also, with its rising size, the fund has transformed into a conservative offering. The large-cap allocation of the fund has been increased over time. The number of stocks has increased from below 30 (prior to 2006) to as high as 89 (September 2007). It currently holds 69 stocks. The allocation to the top 10 holdings has been brought down to an average of 32 per cent over the past year, as on August 2009.
The fund manager tends to tilt towards growth stocks but sticks largely to a buy-and-hold strategy, without overlooking opportunistic bets. Among sectors as well, the fund is not seen making frequent ins and outs.
With returns of 36.25 per cent over the five-year period ending September 30, it is the best-performing in the category of tax planning funds.
CANARA ROBECO EQUITY TAX SAVER
The fund has turned around in recent times. Given its performance in 2007, 2008 and the recent market run-up, it is a worthwhile choice in the tax planning category of funds. Over the three-year period ending September 30, the fund is the second best performing one in its category, with returns of 22.86 per cent (category average, 10.38 per cent).
Over the 12 years from its launch till 2005, the fund has underperformed its category in all but two years. It has impressed since 2007, and in 2008, when the market tumbled, it shed just 46.85 per cent (category average, 55.67 per cent). Some of the sectoral bets played by the fund manager worked in favour of the fund. The manager wasted no time in increasing the allocation to construction stocks. He added stocks like IVRCL Infrastructure & Projects, Madhucon Projects, Mcnally Bharat Engg and Punj Lloyd. He also, added Grasim Industries, Larsen & Toubro, Reliance Industries, Infosys Technologies and Reliance Communications to the portfolio.
In November 2007, as it added stocks like Cairn India and Reliance Petroleum.The fund has also left behind the days when its top 10 holdings accounted for almost the entire (January 2001) portfolio. While an average of 34 stocks since 2007, and the top 10 holdings accounting for around 43 per cent of the portfolio (in line with the category), the fund looks fairly diversified.