GEM GAZE 

November 2014 

ELSS Funds are suitable for all types of investors who are not risk averse and need to invest in tax planning instruments. New investors, who want to test the waters before jumping into equity mutual funds, will find this especially useful. Though there is no age to get started on an ELSS, it is a good investment to have for those who are just starting their careers as it can help them shed their inhibition about investing in equities through mutual funds. A healthy dose of equities through the ELSS route gives the investor the extra edge he needs to beat inflation.

All the GEMs of the 2013 GEMGAZE have retained their esteemed GEM status in the 2014 GEMGAZE.

Magnum Taxgain Fund Gem

Mammoth in the making

SBI Magnum Taxgain is one of the oldest and largest tax-saving ELSS schemes in the country with an AUM of Rs. 4,930 crore. An interesting feature of the fund is its stock picking which is more inclined to companies that have disproportionately large market share, with 66% of the funds in large cap stocks. There are 45 stocks in the portfolio, with the top 5 holdings accounting for 29% of the portfolio. The top three sectors that the fund invests in are finance, technology, and energy. One-year return of the fund is 53.82% as against the category average of 52.88%. The expense ratio is 2.28% and the portfolio turnover ratio is 9%.

HDFC Tax Saver Fund Gem

Diversification pays

At Rs. 4681 crore, HDFC Tax Saver Fund is the second largest ELSS fund in the industry. Currently, large caps account for 66% of the portfolio. With 50 stocks and the top 5 holdings accounting for 30%, the fund looks well diversified. The top three sectors that the fund invests in are finance, technology, and engineering. In the past one year, the fund has earned a return of 61.32% as against the category average of 52.88%. The expense ratio is 2.25% and turnover ratio is 37%. 

Canara Robeco Equity Tax Saver Fund Gem

Astute agility

The Rs. 851 crore Canara Robeco Equity Tax Saver Fund, has been pretty successful in utilising the agility that a small fund offers by spotting opportunities and capitalising on them. Allocation to the top 5 holdings (26%) is in line with the category average. Over the past five years, energy, financial services, and technology have been part of the top five sectors and the top three sectors are finance, technology, and energy, in that order. There are 53 stocks in the portfolio with 64% allocated to largecap stocks. A large-cap focus and the ability to shift in and out of cash positions depending on market volatility has helped the fund tide over corrections and reasonably ride on rallies. One-year return is 47.41 % as against the category average of 52.88 %. The expense ratio is 2.59% and portfolio turnover ratio is 45%. 

Religare Invesco Tax Plan Gem

Consistent returns through viable strategy

With a corpus size of Rs. 202 crore, Religare Tax Plan is one of the smallest schemes in its category, but it packs in quite a punch. The fund invests across market capitalisation and sectors and spreads its assets over 45 stocks without being overly diversified and the top 5 holdings constitute 29%. The top three sectors are finance, technology, and services. Even though the fund currently has a large cap bias with 54% allocation, it has not been hesitant about being heavily invested in smaller companies. In the past too, the mid-cap and small-cap allocation have been high. Its relatively small size makes an effective mid-cap strategy viable. The one-year return is 55.76% as against the category average of 52.88%. Despite its relatively short history, the fund has consistently delivered returns for the investors. Over one, three, and five year time-frames, the fund has beaten the BSE 100 by a margin of two to five percentage points. In the rollercoaster ride the market has taken in the past five years, the fund performed well across market cycles. Stock picking has been the key for success of this fund. The expense ratio is 2.91% and the portfolio turnover ratio is 20%.

DSPBR Tax Saver Fund Gem

Growth-oriented diversification

DSPBR Tax Saver Fund has a fund corpus of around Rs 1015 crore. It has a growth-oriented multi cap portfolio with 61% of the corpus in large cap stocks. There are 86 stocks in the portfolio. The top 5 holdings constitute 22%. The top three sectors are finance, technology, and automobile. DSP BR Tax Saver fund has offered 55.08% returns for the last one year as against the category average of 52.88%. The expense ratio is 2.66% and the portfolio turnover ratio is 50%.