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Mutual Fund Review: HDFC TAXSAVER

AFTER beating its peers almost every year (barring 1999 and 2002) in its 14year history, the fund found itself in the fourth quartile in 2007. That was the only year when it underperformed the S&P CNX 500. But the very next year, it was back as a top-quartile performer. It curtailed its fall to a lower level in 2008 and delivered close to 100 per cent return in 2009.

The mandate is not limited across market caps or sectors. Although currently over half the fund's assets are into large-caps, it has not always been the case. It is among the few funds which have invested in the Indian Depository Receipts of Standard Chartered Plc and is among the few not holding Reliance Industries in its portfolio. Even in its sector allocation, the fund is not wary of contrarian moves. In 2009, when other funds chased energy, this fund had just 10 per cent allocation to the sector.

The rising asset base has led to an increase in the number of stocks to 55, from around 40 stocks (end 2007). However, the fund has a long tail of stocks (currently 23), each with an allocation of less than one per cent. They collectively account for close to 10 per cent of the funds portfolio. With the top five holdings accounting for 22 per cent, the fund looks well diversified. Allocation to a single stock has rarely exceeded seven per cent after Kulkarni took over in November 2006.

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