LAUNCHED in 1996, Taurus Tax Shield is among the oldest schemes in the taxsaving mutual fund category. Although the fund is not so popular among investors, its performance has been impressive since 2007. The fund has only 68 crore of asset under management (AUM), but its small size has not deterred it from generating notable returns
PERFORMANCE:
Over the past 17 years, Taurus Tax Shield has demonstrated inconsistent performance for more than a decade. In 1998 and 1999, the fund had outperformed its benchmark index the BSE 200 as well as the broader market indices, the Sensex and the Nifty. Barring these two blockbuster years, the fund had failed to enthuse investors.
However, since 2007, it has been performing consistently. The returns have been better than the major market indices as well as its benchmark BSE 200. The frequent change in the fund management has surprisingly led to its better performance.
For instance, in 2007, Taurus Tax Shield generated 110% returns against 50% returns of the Sensex and the Nifty. In the 2008 global financial meltdown, the fund cushioned its fall much better than the markets as well as its peers in the category.The fund continued its winning streak in 2009 and 2010 as well. It returned about 94% gains against the Sensex and the Nifty's 81% and 76% returns, respectively. BSE 200 delivered about 88% return. In 2010, the fund saw a little slowdown in its performance. It marginally outperformed its benchmark and the major market. For instance, Taurus Tax Shield returned 19% against 17% gains of the major market indices.
PORTFOLIO:
Taurus Tax Shield has undergone change in the investment strategy owing to change in the fund managers. From being a large-cap fund, with just about 20 stock holdings in the portfolio the fund has transformed to a more diversified fund in 2008. Currently the fund's portfolio has 37 stocks with a ratio of 60:40 in large-cap and mid-cap orientation. The fund is moving towards growth-oriented strategy from its defensive strategy. As a result, it has reduced exposure from healthcare sector. FMCG sector and public sector units are the others where the fund's exposure has less exposure.
Further, the fund also has exposure in sectors, such as infotech, metal and oil & gas. It is interesting to see that the fund churns its portfolio quiet frequently, moving in and out of sector. It doesn't have even one stock that it holds onto the past two years. In 2010, the fund reduced its engineering stock holding and increased its exposure to the financial sector. The high cash position was a legacy of the fund, but since May 2010, it has reduced its cash exposure to just about 6%.
OUR VIEW:
Taurus Tax Shield has improved its performance in the past three years. Given the fund's performance in the recent past and its in vestment strategy, it is clearly proven to be worthwhile tax-saving investment. However, investor must keep in mind that the expense ratio of this fund is a little high due to the low-asset base.
