Birla Sun Life Tax Relief 96

Birla Sun Life Tax Relief 96 scheme seeks long-term capital growth and will invest approximately 80 per cent of its assets in equity, while the balance would be a invested in debt and money market instrument. It was converted to an open-ended scheme with effect from July 1999. A combination of top down & bottom up approach will be followed in the stock selection process.

Birla Sun Life Tax Relief 96 fund had a great run in the initial years after launch, slipped behind its category, sporting a moderate three-star rating for many years, and has shown promise again since 2012. The fund has climbed from a three-star to a four-star rating in this period. It follows a multi-cap strategy, with 55-60 per cent large-cap exposure and the rest in small and mid caps.

The strategy is bottom-up and uses a 360-degree view of a company in order to invest in compelling businesses without any size bias. The investment philosophy of the fund is to invest in quality companies. This involves selecting companies run by professional managements and which have predictability of earnings and strong moats. The portfolio reveals quite a few unconventional mid-cap picks as top holdings. The fund’s quality bias has also led to a number of MNC stocks figuring among stock choices.

The fund’s year-by-year record since 1998 shows a few bad patches. The fund has struggled in bear markets both in 2008 and 2011, but it has also delivered sharply higher returns than the category in the big bull years of 2007, 2009, 2012 and 2014. The fund suffered fund-manager shuffle in its initial years until 2006. The management team has remained very stable, with Ajay Garg at the helm from 2006.

Overall, it’s a fund that sticks to quality mid caps for the long haul.

HDFC Taxsaver Fund

The HDFC Taxsaver scheme seeks capital appreciation with at least 80 per cent exposure to equities, FCDs, preference shares and bonds of companies.

Once a hot favorite in the tax planning category, HDFC Tax Saver has delivered a patchy show in the last four years, starting from 2012. While it has managed to stay ahead of benchmarks, sluggish returns vis-Ã -vis its peers have seen its ratings slip from 4 stars in early 2013 to 1 star now. While the fund’s 7 and 10 year return are quite healthy, both 5 and 3 year returns are below the category averages by 3-4 percentage points.

The asset size has dipped from over Rs 5,200 crore in February 2015 to Rs 4,424 crore by January 2016. Like other HDFC Funds, this fund follows a blend of value and growth investing. But its tilt towards low PE stocks in an expensive market has become more pronounced in the last couple of years. A heavily mid-cap tilted fund until 2012, it has taken to an overweight position in large-cap stocks in the last couple of years. This tilt is likely to have reduced portfolio risks, but may have reduced the fund’s overall returns too, in a period where mid-cap stocks sharply outperformed large-caps.

Though the HDFC Taxsaver fund did participate in the bull run of 2014, its sharply lower returns in the last one year have dragged the overall performance. Like other HDFC funds, the slowdown appears to be attributable to the fund’s heavy bets on pro-cyclical sectors of the economy, which haven’t paid off amid a delayed recovery. As of February 2016, the fund had overweight positions in financials, engineering, construction and was under-weight in FMCG, healthcare and automobiles. While this contrary take on the economy has cost the fund in terms of returns, it has contributed to reasonable portfolio PE of 15, a sizeable discount to the market.

The fund’s big bet on the economy can pay off strongly if the much delayed economic recovery gathers steam. But its recent returns have been the casualty of the fund sticking to its guns on this bet.

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This fund is handled by a highly skilled fund manager, but he has not been able to replicate the out performance of his other funds when it comes to this scheme. This fund has visibly lagged behind peers in recent years, perhaps on account of its tilt towards larger-sized companies compared to other funds in its category.

The fund maintains a compact portfolio of stocks, and although its top picks are prominent benchmark heavyweights, the rest of the portfolio has no resemblance to its benchmark. It has among the lowest turnover ratio, indicative of a strict buy-and-hold philosophy.

For now, investors may look elsewhere with other options in the tax-saving category boasting of a much superior risk-reward profile.

DSP BlackRock Micro Cap Fund

DSP BlackRock Micro Cap Fund puts a break on fresh inflow

With effect from 20 February, 2017, all subscription/switch-in applications in the fund will be temporarily stopped

With effect from February 20, 2017, all subscription/switch-in applications in the Rs 4751-crore scheme and registration of new Systematic Investment Plan (SIP), Systematic Transfer Plan (STP), Dividend Transfer Plan (DTP) in the scheme have been temporarily stopped.

However, the fund-house said the scheme will continue to allot units for subscription transactions pursuant to SIP, STP, Dividend Transfer Plan, Super SIP facilities registered prior to Feb. 20. and pursuant to declaration of dividend under the dividend reinvestment option offered under the Scheme.

Top ELSS Funds

Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds

Top 10 Tax Saver Mutual Funds for 2017 – 2018

Best 10 ELSS Mutual Funds to invest in India for 2017

1. DSP BlackRock Tax Saver Fund

2. Invesco India Tax Plan

3. Tata India Tax Savings Fund

4. ICICI Prudential Long Term Equity Fund

5. Birla Sun Life Tax Relief 96

6. Franklin India TaxShield

7. Reliance Tax Saver (ELSS) Fund

8. BNP Paribas Long Term Equity Fund

9. Axis Tax Saver Fund

10. Birla Sun Life Tax Plan

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Look carefully at the portfolio of an ELSS

There is more to a tax-saving fund than just its performance. It must fit into your portfolio.

Though all equity diversified funds that offer a tax break are classified as equity linked savings schemes, or ELSS, all funds are not the same.

For one, you need to check the market cap of the fund. For instance, Mirae Asset Tax Saver has around 72% of its portfolio in large caps, HSBC Tax Saver has around 34% in mid and small caps, and Edelweiss ELSS has 44% of its portfolio in mid and small caps. Depending on what market cap you are comfortable with and which fits in with your portfolio, search for a fund accordingly. For instance, if your portfolio is packed with large-cap funds, you can opt for an ELSS which tilts towards smaller fare.

On similar lines, check whether the fund manager takes big bets or prefers going with a diversified portfolio, and see where your comfort level lies.

For example, the top 10 stocks in JM Tax Gain corner over 51% of the portfolio. The portfolio is completely invested in around 30 stocks. Edelweiss ELSS has just around 32% of its portfolio in the top 10 stocks and sports a portfolio of around 64 stocks.

So check how concentrated the top holdings are and how tight the portfolio is.