GEM GAZE

November 2019

The consistent performance of four out of five funds in the November 2018 GEMGAZE is reflected in the four funds holding on to their esteemed position of GEM in the November 2019 GEMGAZE. Birla Sunlife Tax Plan has been shown the exit route in view of its lacklustre performance and Birla Sunlife Tax Relief 96 has been accorded a red carpet welcome.

Birla Sun Life Tax Relief 96 Gem

Superior Competitive Advantage

Launched in March1996, the Rs. 9129 crore Birla Sun Life Tax Relief 96, is one of the oldest ELSS funds in the industry. Currently, large caps account for 43.59% of the portfolio. Portfolio allocations show the fund to be small and mid-cap oriented when compared to its peers, with a 56.41% allocation to small and mid-cap stocks. This tax-saving fund is market cap neutral, with no bias towards any particular section of the market. Compared to peers, the fund has a higher exposure to the mid-cap segment, which reflects in its portfolio’s average market cap— half of its category average. With 44 stocks and the top 5 holdings accounting for 37.49%, the fund looks well-diversified. The fund invests 50.67% in the top three sectors, i.e., finance, healthcare and FMCG. The funds’ approach is aggressive, as the fund manager does not believe in index hugging. The fund takes large positions in its top bets, most of which are on stocks outside the benchmark index. The focus remains on companies boasting superior quality—with ability to sustain competitive advantages over longer periods. The emphasis on quality is visible in the slant towards MNC stocks. The fund has been a consistent outperformer over the years; since inception, this mutual fund has managed to give a very impressive return of 23.73% along with displaying a very consistent performance. In the past one year, 5 years and 10 years, the fund has earned returns of 8.03%, 11.38% and 12.31% respectively as against the category average of 11.08%, 8.79% and 11.68% respectively. The fund is benchmarked against the S&P BSE 200 TRI. The expense ratio is 2.06% and turnover ratio is 1%. The fund is managed by Mr. Ajay Garg since October 2006.

Franklin India Taxshield Fund Gem

Proven track record

Launched in April 1999, the Rs. 3,985 crore Franklin India Taxshield Fund is one of the oldest ELSS funds in the industry with a proven track record in bull and bear phases. An established fund in the ELSS category, known for its consistency of returns and an ability to contain downside, it has religiously maintained a large-cap bias amid different market phases. This ELSS fund’s strategy has been to buy quality large caps or emerging large caps at a reasonable price, even in a category crowded with multi-cap funds. Currently, large caps account for 81.23% of the portfolio. A large-cap oriented fund with a bottom-up investment strategy, this fund always stays fully-invested. The most distinctive feature of the fund's performance history is its ability to do better than its peers when markets crash. It fell only 15.19% as compared to the category average of 23.82% in 2011. But in the next year it slightly lagged behind its peers in terms of performance. Globally, Franklin Templeton is known for its stock selection. The Franklin India Taxshield Fund adopts the value investment philosophy. With 51 stocks and the top 5 holdings accounting for 29.98%, the fund looks well diversified. The fund invests 57.83% in the top three sectors, i.e. finance, energy and FMCG. Since inception the fund has given returns of around 21.72%. In the past one year, five years and ten years the fund has earned returns of 8.10%, 8.29% and 13.27% respectively as against the category average of 11.08%, 8.79% and 11.68% respectively. The fund's returns in the last one year show a slowdown relative to the category and benchmark. The fund's year-to-year returns do not always beat its more aggressive peers, but its performance adds up to very handsome returns over the long term. The fund is benchmarked against NIFTY 500TRI. The expense ratio is 1.91% and turnover ratio is 20%. The fund is managed by Mr. R. Janakiraman and Mr. Lakshmikanth Reddy since May 2016.

ICICI Prudential Long-term Equity Fund Gem

One up on its peers

At Rs. 6,161 crore, ICICI Prudential Long-term Equity Fund, launched in August 1999, is one of the largest ELSS funds in the industry. Currently, large caps account for 71.88% of the portfolio. With 57 stocks and the top 5 holdings accounting for 28.19%, the fund looks well diversified. The fund invests 48.81% in the top three sectors, i.e. finance, energy and healthcare. The fund is valuation-focused and the portfolio is constructed around stocks across sectors and market-capitalisation ranges, based on cheaper valuation and reasonable growth expectations. Expensive stocks which cannot be explained by valuation tools are avoided. A fund which has outpaced its benchmark over not one but three different market cycles, it has beaten its benchmark in 13 of the last 15 years. This is a rare ELSS fund that has managed to stay one step ahead of the benchmark on a trailing one-, three-, five- and ten-year basis, while also beating the category over these periods. The fund has earned a return of 19.71% since the fund’s inception. In the past one year, five years and ten years, the fund has earned returns of 8.08%, 7.96% and 13.43% respectively as against the category average of 10.31%, 8.64% and 11.60% respectively. The fund is benchmarked against NIFTY 500TRI. The expense ratio is 2.14% and turnover ratio is 60%. The fund is managed by Mr. Sankaran Naren and Mr. Harish Bihani since November 2018.

Invesco India Tax Plan Gem

Quality conscious conservative fund

Incorporated in December 2006, Invesco India Tax Plan, with a corpus size of Rs. 962crore, 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 40 stocks without being overly diversified and the top 5 holdings constitute 34.96%. 55.24% of the assets are invested in the top three sectors, finance, energy and FMCG. Even though the fund currently has a large cap bias with 72.20% 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. Designed to own some of the best large-cap and mid-cap ideas of the fund house, the fund prefers quality businesses with healthy growth. But it is careful about not going overboard on valuations. The fund's recent large-cap tilt may help contain downside in the event of a market correction. The fund has delivered 13.77% returns since inception. The one-year, five year and ten year returns are 11.60%, 10.42% and 14.18% respectively as against the category average of 10.31%, 8.64% and 11.60% respectively. The year-to-year returns of this fund show it to be equally good at navigating both bull and bear markets, which is a hallmark of this fund. It managed to contain downside to levels much lower than its benchmark during 2008 and 2011 and has outpaced it by big margins both in 2010 and 2014. The last one year has seen the fund outpace its benchmark, but it slightly lagged behind its category. This could be due to its higher large-cap tilt in a category that is largely multi-cap-focused. This fund is a good choice for investors who are looking for a conservative approach to tax planning. Despite its relatively short history, the fund has consistently delivered returns for the investors.  Stock picking has been the key for success of this fund. The fund is benchmarked against the S&P BSE 200 TRI. The expense ratio is 2.16% and the portfolio turnover ratio is 91%. The fund is managed by Mr. Amit Ganatra and Mr. Dhimant Kothari since March 2018.

DSP Tax Saver Fund Gem

Growth-oriented outperformance

Launched in January 2007, DSPBR Tax Saver Fund has a fund corpus of around Rs 6103 crore.  Though multi-cap by mandate, the fund has been quite large-cap oriented in the last five years. Typically, 65 to 75% of the portfolio has been in large-caps and 20 to 25% in mid-caps. The fund also takes tactical calls to capitalise on market trends and opportunities. It has a growth-oriented multi cap portfolio with 77.01% of the corpus in large cap stocks at present. There are 65 stocks in the portfolio. The top 5 holdings constitute 29.16%. 60.16% of the assets are invested in the top three sectors, finance, energy and construction. This fund has outperformed its benchmark in eight out of nine years since launch and its peers in seven of those years. The fund's margin of outperformance relative to the category and benchmark has widened in the last one year to over 6 percentage points. On a three- and five-year basis, its annualised returns are over 7 percentage points and 3 percentage points ahead of the benchmark and category, respectively. It is creditable that this has been managed with a distinct large-cap tilt relative to the category. The track record suggests that the fund has proved better at navigating bull runs and volatile phases in the market than bear phases. In 2008 and 2011, the fund lost slightly more than the category. It has delivered sizeable outperformance in 2012 and 2016. However, as the fund has seen a change in manager in 2015 and also adopted a higher allocation to large-cap stocks, past performance may not be a great guide to the future. DSP BR Tax Saver fund has offered 13.56% returns since inception. In the last one year, five years, and ten years, the fund has earned returns of 18.05%, 11.17% and 13.77% respectively as against the category average of 10.31%, 8.64% and 11.60% respectively. The fund is benchmarked against NIFTY 500TRI. The expense ratio is 1.84% and the portfolio turnover ratio is 134%. The fund is managed by Mr. Rohit Singhania since July 2015.