GEM GAZE
November 2009
Gem chase!
Tax planning is an exercise that needs to be evenly spread through out the financial year. April is the ideal time to start this much-needed exercise. November, though a tad better than March, is, no doubt, late…but better late than never…
With Birla Sun Life Tax Plan and Principal Personal Tax Saver Fund failing to consistently beat the category average, they have been shown the door. Principal Personal Tax Saver makes an exit after a brief stint of one year as a GEM. The effervescent Canara Robeco Tax Saver Fund has been accorded a red carpet welcome. All the other funds that figured in the November 2008 GEM GAZE have rightfully retained the status of a GEM in November 2009 too.
Magnum Taxgain Gem
Slow and steady…
It is the oldest and largest ELSS Fund launched in 1993 with assets worth Rs 4962 crores at present - almost 40% of the ELSS category. It is one of the best tax saving funds in the long-term with a good portfolio and a consistent track record. With returns of 36.25% over the past five years for the period ending September 30, 2009, it has been awarded the ICRA Mutual Funds Awards in 2009. The churn in management has not affected the consistency of returns. The current strategy is to take long term calls in stocks and sectors with a view to minimising volatility and risk in the fund. It has a decidedly large cap orientation with muted returns when the market is rising and limited downside when the going gets tough. In the bear hug of 2008 and the first quarter of 2009, the fund took refuge in debt and cash. While the fund fell with its peers in 2008, in the opening months of 2009, the fund stood head and shoulders above its category. Its timely shift to equity and its presence in the key sectors, namely, metals, finance, and engineering, enabled the fund to maintain the lead during the recent rally from March 9, 2009. It has broadened its portfolio from as low as 30 in 2006 to 89 in 2007 and 69 at present. The allocation to the top 10 holding has been brought down to an average of 32% over the past year as on August 2009. The fund’s expense ratio at 2.5 is marginally on the higher side. A radical transformation has been noticed in the fund in recent months with a pronounced tilt towards conservatism. Its long term record speaks volumes and makes it a worthy pick.
HDFC Tax Saver Gem
Daring duel…
Launched in December 1995, HDFC Tax Saver Fund, with an AUM of Rs 1947 crores, has performed handsomely over the longer term horizon, posting annualised returns of 19.23 per cent over the last five years. The fund has strong leanings towards mid-cap stocks (44 per cent of the total portfolio), particularly in sectors such as banking and engineering. The fund has been quite selective in its picks in which it invests with conviction. The number of stocks in the portfolio is restricted to a mere 20 or 25 though recently, it has touched 30, with the top five accounting for more than 30%. After taking advantage of the mid cap rally in the past two and a half years, the fund is back to its large cap tilt. It has a comparatively low expense ratio of 1.98. It has never been rated below four stars in its entire rating history. In 2009, the fund is up 27% as against 23% by its peers. It has a glorious history of beating its average peer by more than 10% barring a few lacklustre years.
Fidelity Tax Advantage Gem
On the fast track…
In its short life of three years it has accumulated awards and accolades…Fidelity Tax Advantage has won the CNBC TV 18 CRISIL Award for 2009 as well as the ICRA Seven Star Gold Award 2009, besides being rated as a 5 Star fund by Value Research. The fund has outperformed its benchmark, the BSE 200 for the one year, three years as well as since inception. It has turned in a promising performance with 25% in mid caps and 11% in small caps. 45% of the fund’s assets are invested in the top three sectors, namely, financial services, energy, and healthcare. Its expense ratio is relatively low at 2.18 with an AUM of Rs 1117 crores.
Sundaram BNP Paribas Tax Saver Gem
Driver with a drive…
It has proved its mettle time and again. While the returns have been consistent on an year to year basis, the returns cannot be termed astounding. It was, however, in 2008 when the global financial crisis reached a cresendo, that the fund gained an edge over its peers and its benchmark, the BSE 200 by exhibiting remarkable resilience. The fund cushioned its fall to about 48% as against a fall of 52% in the Sensex. The category average fall was a dismal 56%. The fund lagged its peers in the 2009 bull run, by clocking an average of 68% as against market returns of over 70%. It has exhibited a sterling performance record, thanks to its good portfolio/sector mix - a rewarding multi cap portfolio mix with 35% in mid caps and right moves at the right time. The fund has been highly skewed towards sectors such as financial services, energy, and FMCG, with the top three sectors constituting about 52 per cent of the fund's net assets. Flexibility is the key…Its adaptability is appealing. Its nimble asset allocation took the cash to almost 36% in 2008. The fund manager keeps moving in and out of cash. In September 2008, it was 28.75%, it was brought down to 8.84% in October only to raise it to 36.53% the following month. It averaged 24% in the three-month period ending March 2009. As the markets started its upward journey since March 9, 2009, the cash level slid to 6% and has been hovering at that level ever since. It is not uncommon to see it move in and out of different sectors in a short span of time. The fund manager is quick to capitalise on opportunities available in sectors or stocks. But rarely does the fund manager take an exposure exceeding 5% in a single stock. In fact, this ELSS fund has the highest Sharpe ratio among its peers, meaning, it delivers the highest returns per unit of risk taken. This versatile fund tries to look at the bigger investment picture. Its expense ratio of 2.06 is lower than the category average of 2.32. The fund has earned the Morningstar award for 2008 in the ELSS category. With a mere Rs 3.8 cr in 2001, the AUM at present is Rs 1213 cr. The fund’s AUM has been surging at a mind-boggling rate of nearly 300 times.
Gem chase!
Tax planning is an exercise that needs to be evenly spread through out the financial year. April is the ideal time to start this much-needed exercise. November, though a tad better than March, is, no doubt, late…but better late than never…
With Birla Sun Life Tax Plan and Principal Personal Tax Saver Fund failing to consistently beat the category average, they have been shown the door. Principal Personal Tax Saver makes an exit after a brief stint of one year as a GEM. The effervescent Canara Robeco Tax Saver Fund has been accorded a red carpet welcome. All the other funds that figured in the November 2008 GEM GAZE have rightfully retained the status of a GEM in November 2009 too.
Magnum Taxgain Gem
Slow and steady…
It is the oldest and largest ELSS Fund launched in 1993 with assets worth Rs 4962 crores at present - almost 40% of the ELSS category. It is one of the best tax saving funds in the long-term with a good portfolio and a consistent track record. With returns of 36.25% over the past five years for the period ending September 30, 2009, it has been awarded the ICRA Mutual Funds Awards in 2009. The churn in management has not affected the consistency of returns. The current strategy is to take long term calls in stocks and sectors with a view to minimising volatility and risk in the fund. It has a decidedly large cap orientation with muted returns when the market is rising and limited downside when the going gets tough. In the bear hug of 2008 and the first quarter of 2009, the fund took refuge in debt and cash. While the fund fell with its peers in 2008, in the opening months of 2009, the fund stood head and shoulders above its category. Its timely shift to equity and its presence in the key sectors, namely, metals, finance, and engineering, enabled the fund to maintain the lead during the recent rally from March 9, 2009. It has broadened its portfolio from as low as 30 in 2006 to 89 in 2007 and 69 at present. The allocation to the top 10 holding has been brought down to an average of 32% over the past year as on August 2009. The fund’s expense ratio at 2.5 is marginally on the higher side. A radical transformation has been noticed in the fund in recent months with a pronounced tilt towards conservatism. Its long term record speaks volumes and makes it a worthy pick.
HDFC Tax Saver Gem
Daring duel…
Launched in December 1995, HDFC Tax Saver Fund, with an AUM of Rs 1947 crores, has performed handsomely over the longer term horizon, posting annualised returns of 19.23 per cent over the last five years. The fund has strong leanings towards mid-cap stocks (44 per cent of the total portfolio), particularly in sectors such as banking and engineering. The fund has been quite selective in its picks in which it invests with conviction. The number of stocks in the portfolio is restricted to a mere 20 or 25 though recently, it has touched 30, with the top five accounting for more than 30%. After taking advantage of the mid cap rally in the past two and a half years, the fund is back to its large cap tilt. It has a comparatively low expense ratio of 1.98. It has never been rated below four stars in its entire rating history. In 2009, the fund is up 27% as against 23% by its peers. It has a glorious history of beating its average peer by more than 10% barring a few lacklustre years.
Fidelity Tax Advantage Gem
On the fast track…
In its short life of three years it has accumulated awards and accolades…Fidelity Tax Advantage has won the CNBC TV 18 CRISIL Award for 2009 as well as the ICRA Seven Star Gold Award 2009, besides being rated as a 5 Star fund by Value Research. The fund has outperformed its benchmark, the BSE 200 for the one year, three years as well as since inception. It has turned in a promising performance with 25% in mid caps and 11% in small caps. 45% of the fund’s assets are invested in the top three sectors, namely, financial services, energy, and healthcare. Its expense ratio is relatively low at 2.18 with an AUM of Rs 1117 crores.
Sundaram BNP Paribas Tax Saver Gem
Driver with a drive…
It has proved its mettle time and again. While the returns have been consistent on an year to year basis, the returns cannot be termed astounding. It was, however, in 2008 when the global financial crisis reached a cresendo, that the fund gained an edge over its peers and its benchmark, the BSE 200 by exhibiting remarkable resilience. The fund cushioned its fall to about 48% as against a fall of 52% in the Sensex. The category average fall was a dismal 56%. The fund lagged its peers in the 2009 bull run, by clocking an average of 68% as against market returns of over 70%. It has exhibited a sterling performance record, thanks to its good portfolio/sector mix - a rewarding multi cap portfolio mix with 35% in mid caps and right moves at the right time. The fund has been highly skewed towards sectors such as financial services, energy, and FMCG, with the top three sectors constituting about 52 per cent of the fund's net assets. Flexibility is the key…Its adaptability is appealing. Its nimble asset allocation took the cash to almost 36% in 2008. The fund manager keeps moving in and out of cash. In September 2008, it was 28.75%, it was brought down to 8.84% in October only to raise it to 36.53% the following month. It averaged 24% in the three-month period ending March 2009. As the markets started its upward journey since March 9, 2009, the cash level slid to 6% and has been hovering at that level ever since. It is not uncommon to see it move in and out of different sectors in a short span of time. The fund manager is quick to capitalise on opportunities available in sectors or stocks. But rarely does the fund manager take an exposure exceeding 5% in a single stock. In fact, this ELSS fund has the highest Sharpe ratio among its peers, meaning, it delivers the highest returns per unit of risk taken. This versatile fund tries to look at the bigger investment picture. Its expense ratio of 2.06 is lower than the category average of 2.32. The fund has earned the Morningstar award for 2008 in the ELSS category. With a mere Rs 3.8 cr in 2001, the AUM at present is Rs 1213 cr. The fund’s AUM has been surging at a mind-boggling rate of nearly 300 times.
Canara Robeco Tax Saver In
Turbo charged…
The fund has come of age to emerge as the compelling option in the ELSS category on the back of robust returns. A year ago, this fund did not make it to our elite list of GEMs. However, a dramatic turnaround since 2007 has catapulted it to an enviable position with an impressive 22.86% (10.38% category average) in the past three years. It has consistently beaten the category average since 2006, thanks to its aggressive mid cap orientation. In 2008, when the market tumbled, it shed a mere 46.85% as against the category average of 55.67%. Some of the sectoral bets, especially construction, worked in favour of the fund. The fund has left behind the days when its top 10 holdings accounted for the entire portfolio (January 2001). With an average of 34 stocks since 2007 and the top 10 holdings accounting for around 43% of the portfolio (in line with the category average), the fund looks fairly diversified. This tiny Rs 67 crore fund has an expense ratio of 2.5.
The ELSS collections in the last quarter of the financial year 2008-2009 dipped by a whopping 73% when compared to the corresponding period in the last financial year. This was a direct consequence of the free fall of the stock market during the global economic crisis. Irrespective of market gyrations, a systematic investment in these ELSS GEMs will ensure effective and stress-free tax planning and wealth creation!
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