Tata India Tax Savings Fund – Best ELSS Fund

Tata India Tax Savings scheme seeks long-term capital growth. Investments in equity would be at least 80 per cent of the corpus, while allocation to debt and money market instruments can go up to 20 per cent.

Tata India Tax Savings Fund suffered a bad patch from 2008 to 2010 but got its act together in the last six years, it has climbed to a four-star rating lately. The fund’s mid-cap allocations, its focus on growth-style investing and penchant for buying quality stocks, which have been huge gainers in this rally, have all lifted performance. The fund’s strategy relies on buying businesses which have compounding characteristics, strong growth potential and high capital efficiency. A part of the portfolio is allocated to stocks in special situations arising out of the market, industry or company developments. This ‘value’ characteristic is likely to have helped the fund’s returns in the last one year, when cyclicals have bounced back and purely quality-focused funds have suffered a setback in returns.

Tata India Tax Savings Fund performance relative to the category and the benchmark was somewhat patchy until 2009 but has seen improvement in the last five years. Historically, this fund has been good at containing losses during bear phases such as 2001, 2008 and 2011. It barely beat its benchmark during bull phases like 2006 and 2009. But it has aced this particular bull phase from 2014. The fund maintains a 45-60 per cent allocation to large-cap stocks and 25-35 per cent to mid caps. In the last few months, large caps have made up about 45-50 per cent of the assets.

Tata India Tax Savings Fund is for investors with some risk appetite and who seek a multi-cap approach to tax-planning.

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 2018

Best 10 ELSS Mutual Funds to invest in India for 2018

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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Franklin India Taxshield Fund

Franklin India Taxshield Fund

  • Investment Style: Large Growth
  • Investment Process: A research-driven investment approach with a focus on reasonably valued stocks
  • Fund Manager: Lakshmikanth Reddy
  • The fund is helmed by Lakshmikanth Reddy, who joined the fund company on May 2016, with R. Janakiraman as the named comanager.

While earlier it had a more definite mandate of investing around 70% in large-cap stocks and 30% in small/mid-cap stocks, it is now managed with a flexi-cap approach, which enables the manager to invest without paying heed to the benchmark index, market cap, or any specific style of investing. The change in the strategy is largely to align it with Reddy’s skill-sets and to capture wider range of investment opportunities in the fund. Although the investment team has a reasonably good track record in running flexi-cap strategies, which is positive, it should be noted that it will also change the fund’s risk/reward profile going ahead. Further, the changes here have made the fund’s past track record less relevant.

Earlier, the fund’s Morningstar Analyst Rating of Gold was driven by our conviction in Radhakrishan’s managerial skills and his ability to execute the strategy with a good degree of precision. Reddy, on the other hand, shows promise, but his execution capabilities remain untested, which is critical for the success of this fund given the nature of its strategy. Hence, in our opinion, a downgrade here is inevitable.

That being said, Reddy’s extensive research experience will aid him in his job. Furthermore, he is supported by a close-knit investment team that ranks among the best in the industry. We are fairly impressed with its disciplined investment approach and believe that it should hold the fund in good stead. Therefore, despite the downgrade, the fund merits a positive rating.

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

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IDFC Banking Debt Fund

The IDFC Banking Debt Fund has proposed to change its erstwhile strategy of building typically around 12 month portfolio of Bank CD at the end of financial year and run down maturity. The strategy used to work as the borrowings by banks used to peak around year end and decline as the new financial year started.

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· As per current environment where banks are no more showing aggression to borrow as the credit off take is benign and liquidity is surplus due to demonetisation, the above mentioned strategy is not looking attractive.

· Banks have aggressively cut MCLR and current situation is that the bank reference rate (MCLR) and the corporate bond spreads have shrunk from over 200 basis to 60/70 basis.

· With low credit off take, easy liquidity conditions and RBI expected to keep a long pause on rates, the banking system is not in a position to raise rates.

· Given this back drop, we think that the corporate bond rates has little room to delink from MCLR and thus gives a lot of comfort for building a short term portfolio.

As a result, IDFC Banking and PSU Debt Fund* will run a dominant Banks, PSU and PFI bond book with an aim to generate a higher carry in the short term space.

* Change in name will be effective June 12, 2017

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

Top 10 Tax Saver Mutual Funds for 2018

Best 10 ELSS Mutual Funds to Invest in India for 2018

1. DSP BlackRock Tax Saver Fund

2. Tata India Tax Savings Fund

3. Birla Sun Life Tax Relief 96

4. ICICI Prudential Long Term Equity Fund

5. Invesco India Tax Plan

6. Franklin India TaxShield

7. Reliance Tax Saver (ELSS) Fund

8. BNP Paribas Long Term Equity Fund

9. Axis Tax Saver Fund

10. Sundaram Diversified Equity Fund

Invest in Best Performing 2018 Tax Saver Mutual Funds Online

Invest Best Tax Saver Mutual Funds Online

Download Top Tax Saver Mutual Funds Application Forms

For further information contact SaveTaxGetRich on 94 8300 8300

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You can write to us at

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Managing SIPs

How to Manage SIPs

The Systematic Investment Plan is a powerful tool to create long-term wealth by starting with as little as `500. To build a sustainable corpus, one should top up these investments as income rises. However, investors must not compromise their current cash needs with too restrictive SIP commitments.

Mutual funds have tailor-made SIPs to help investors efficiently manage them.The facilities allow investors to alter SIPs according to different life situations.

Registration

An enrolment form must be filled up to register for an SIP. The scheme, SIP date, amount, start date and frequency must be added. It is a good idea to opt for the “perpetual“ option so that the SIP does not stop midway. If this option is not available, a date long enough to complete the goal may be chosen.

Step up SIP

As and when incomes rise, a step up SIP can be used to increase the SIP amount.The SIP instalment will increase at predetermined intervals to match the rise in income level of the investor. A step up SIP form needs to be filled at the time of SIP registration to use this facility. This facility is also known as top up SIP.

Pause SIP

In a cash crunch, one may not want to completely stop SIPs but put them on hold for a while till the situation eases. A pause SIP form may be used to do this. The period for pausing the SIP can be mentioned in the form. A bank mandate also needs to be filled and submitted.

Flexi SIP

Many fund houses provide flexible SIP options that allow changes in SIP amounts based on occurrence of certain events or triggers. These triggers may be based on certain pre-determined formula (eg. index level or target amount). Flexi SIP forms need to be filled with minimum and maximum SIP instalment that can be opted.

Registering an auto debit mandate ensures continuity of SIP instalments.

It is important to read instructions applicable to each of these facilities before enrolment.

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

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Birla Sun Life Mutual Fund SIP Performance

Birla Sun Life Mutual Fund SIP Online

Fund Name 1 Year 3 Years 5 Years 7 Years 10 Years
Birla Sun Life Frontline Equity Fund 21.59 13.68 17.67 15.89 15.35
Birla Sun Life Top 100 Fund 22.79 13.67 17.99 16.30 15.08
Birla Sun Life Balanced ’95 Fund 20.57 15.01 18.11 16.00 15.51
Birla Sun Life Balanced Advantage Fund 22.31 15.50 15.48 13.18 11.82
Birla Sun Life Advantage Fund 24.73 18.19 22.80 18.74 15.84
Birla Sun Life Equity Fund 29.49 19.26 23.05 19.13 16.41
Birla Sun Life Mid Cap Fund 30.48 20.97 24.75 20.34 18.32
Birla Sun Life Small & Midcap Fund 39.80 26.55 28.65 23.20
Birla Sun Life Tax Relief 96 23.53 16.45 21.18 17.85 15.55
Indices
Nifty 50 Index 17.97 8.38 11.15 10.04 9.73
S&P BSE Sensex Index 16.72 7.02 10.19 9.31 9.17
Crisil Balanced Fund Aggressive Index 14.95 9.30 10.98 10.10 9.74
S&P BSE 200 Index 21.24 10.96 13.45 11.57 10.86

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 2018

Best 10 ELSS Mutual Funds to invest in India for 2018

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

Invest in Best Performing 2018 Tax Saver Mutual Funds Online

Invest Best Tax Saver Mutual Funds Online

Download Top Tax Saver Mutual Funds Application Forms

For further information contact SaveTaxGetRich on 94 8300 8300

CPSE ETF – Should you Invest?

While the fund promises a lucrative play on the India growth story, there are certain pitfalls.

The government is set to launch a new exchange traded fund (ETF) based on the Central Public Sec tor Enterprises (CPSE) Index.

Managed by Reliance Mutual Fund, this will be the second CPSE ETF.

The fund aims to provide investors the opportunity to invest in a diversified basket of public sector companies and benefit from the growth potential over the long term. It will mirror the performance of the CPSE Index and the portfolio will comprise shares of the 10 largest PSUs–Oil & Natural Gas Corporation (ONGC), GAIL India, Coal India, Indian Oil, Oil India, Power Finance Corporation, Rural Electrification Corporation, Container Corp, Engineers India and Bharat Electronics.

To find out if it’s a good idea to invest in the fund, it is important to consider how the first CPSE ETF has shaped up. When it was launched in March 2014, the government had offered an upfront discount of 5% on the issue price to sweeten the deal for investors.A year later, the government issued `loyalty’ units in the ratio of 15:1 to eligible retail investors who remained invested since the new fund offer, which amounted to an additional discount of around 6.66%. It is expected that the new CPSE ETF will also offer similar discounts and bonus, providing an attractive entry point to retail investors. In addition to this, the prevailing low valuations of the underlying shares make it a compelling offer-the PSU stocks that form the CPSE ETF are trading at much lower PE ratio and high dividend yields than the broader market. While CPSE Index trades at a PE multiple of 11.44 and dividend yield of 4.07%, the Nifty 50 index is available at 22 times and 1.35% respectively. A low expense ratio of 0.065% also ensures that costs do not eat into the gains made by the scheme over time.

The ETF claims to offer investors a play on the India growth story through a diversified basket of PSU stocks. But a closer inspection of the composition of the underlying index suggests that the portfolio is far from diversified. Three stocks — ONGC, Coal India and Indian Oil Corporation — together constitute around 63% of the entire portfolio. The portfolio is also skewed towards a few sectors, with energy, metals and financial services making up nearly 90% of the portfolio. This lends a higher risk element to the ETF, despite the fact that the underlying stocks are some of the biggest names in their respective sectors.

The performance of the first CPSE ETF looks impressive. Since its inception, the fund has clocked 14.5% annualised return, even as the Nifty 50 index gained 7.5% during the same period. After adjusting for loyalty units, retail investors have made a gain of 17.2%. Over the past year, the fund delivered 17.43% return, even as the Nifty 50 index clocked 2.8%. This effectively makes it the best performing large-cap fund. But this performance needs to be put in context. The fund reached its peak net asset value (NAV) within two months of being launched, supported by a combination of factors such as government oil price deregulation and tumbling crude oil prices. Investors were also of the belief that the efficiency of public sector companies would improve under the new government. The fund’s returns have since mostly been driven by the trend in commodity prices, as the index is heavily skewed towards commodity-driven businesses.

Experts are of the opinion that this is more of a speciality fund, rather than a typical diversified equity fund, and should be regarded as such. Investors should treat this as a sector or thematic fund and invest accordingly. That means it should not be a part of your core allocation. You can opt for partial allocation within the 10% tactical allocation in the portfolio.

Another factor to consider is that any changes in the policies of the promoter could have a bearing on the entire basket. “Retail investors should not over-expose their portfolio to such a concentrated bet. Adding that since the fuel price hike and deregulation is mostly behind us, there aren’t too many things the government can do to help the stock prices of these energy PSUs. Besides, while the lower valuations for the underlying PSU stocks provide some comfort on the downside, they are cheap for a reason. Most private sector businesses in the respective sectors are run far more efficiently, and are therefore awarded expensive valuations. While the likely discount and loyalty bonus makes it an attractive proposition, you should invest in the CPSE ETF only if you think the underlying businesses have growth potential and intend to hold on to it over the long run.

Franklin India Taxshield

As we enter the final quarter of the current fiscal, tax saver funds are now in focus. If you haven’t made your tax saver investment yet, you could use the next two months to invest in tax saver mutual fund schemes.

If you are looking for a fund with a consistent track record, old warhorse Franklin India Taxshield is an option to consider. Of course, equity tax saver schemes are only for those with a moderately high risk appetite and investment horizon of at least three years, since you cannot redeem your investment before that. Even though the lock-in period is three years, this fund will better suit investors with a minimum time frame of five years. Lumpsum investment may be a better option, given the lock-in period.

Launched in 1999, Franklin India Taxshield is among the most consistent performers in the equity linked saving schemes (ELSS) category. Over the last five years, the scheme’s daily one-year return has been higher than its benchmark, the Nifty 500 Index, almost 90 per cent of the time. It scores well on a risk-adjusted performance basis too, with a Sharpe ratio of 0.93. While this is a tad lower than that of peers such as Axis Long Term Equity (1.05) and Birla Sun Life Tax Relief 96 (0.97), it is higher than the average of funds in the category of 0.8.

While the fund has delivered benchmark-beating returns across three, five and ten-year time frame, its performance over a one-year period slipped due to the correction in banking and pharma stocks during September-October 2016. The fund has marginally reduced exposure to these two themes.

Strategies that worked

The fund has been able to contain downsides well during market falls and this has been on three counts.

One, higher large-cap slant compared to other funds in this category cushioned it during turbulent phases.

Second, the fund’s focus on quality stocks and strategy to stay away from momentum stocks also possibly aided performance during down cycles. Moving into defensive themes such as pharma and IT also shielded the fund from volatility.

Likewise, during recovery rallies too, the fund has managed to beat the benchmark by a considerable margin. Right sector shifts aided performance during the pull-back rallies.

Consider this — during the August 2013-March 2015 period, the fund gained nearly 110 per cent. This is higher than the 80 per cent gain for the benchmark during the same period.

Increasing exposure to cyclical themes such as financials, automobiles and industrials provided a leg-up to the fund’s performance.

The fund has managed good returns despite a relatively high expense ratio of 2.48 per cent. Peer funds such as Axis Long Term Equity (1.98 per cent), ICICI Prudential Long Term Equity (2.3 per cent) and Birla Sun Life Tax Relief 96 (2.29 per cent) have had a lower expense ratio.

Over a nine-month period, the fund has increased exposure to cyclicals such as financials, oil and gas, power and auto.

Stability in the economy post remonetisation and recovery thereafter should aid the fund’s performance. It has also reduced exposure to pharma stocks, which have been bogged down by regulatory woes.