Fund with higher risk that can also result in higher returns
This fund revels in flirting with risk. The fund has seen a turnaround in its performance since 2007 and has delivered impressively during market rallies since then. Despite frequent changes in fund management, the fund has worked towards better performance. Before 2008, it was usual for this fund to have concentrated stock bets and high exposure to mid- and small-cap stocks, which dragged its performance during the market downturn. The number of stocks in the portfolio rarely exceeded 20 and it was common to see the top five holdings account 60 per cent of the portfolio. However, in recent times, it has adopted a multi-cap approach and has changed its composition to suit market conditions.
After being the worst performing tax planning fund in 2006, it was the best performer in 2007. This performance was mostly to do with the concentrated stocks such as JP Associates and Reliance Capital, in its portfolio, sector bets in financial services and the exposure to mid- and small-cap stocks that had a good run in the bull phase. Once the markets started to tank in January 2008, the fund transformed into a diversified offering. The number of stocks
increased to 37 by 2008 compared to less than 20 in 2007. The allocation to top five holdings was limited to 15 per cent by December 2008. Increase in exposure to large-caps and high cash positions also helped the fund limit its fall to an average level.
In May 2010, the fund reduced its engineering stock holding and increased its exposure to the financial sector. "The fund was underweight on BFSI sector so we scaled up our weight and exited some of the engineering stocks which didn't have a clear visibility," says Sadanand Shetty, fund manare, Taurus Mutual Fund.
Our View
The fund's performance during market upside has been impressive in recent times and it is also able to contain the downfall. But the fund is still the most volatile among the tax planning funds. It is most suited for tax savers looking for a fund with higher risk that can also result in higher returns.
