ICICI Prudential Tax Plan was launched in August 1999 as an Equity-linked Savings Scheme (ELSS). In this, investments are eligible for a deduction (up to Rs 1 lakh) under Section 80 C of the Income Tax Act. The fund has been ranked Crisil Mutual Fund Rank 1 consecutively for the quarters ended December 2010 and March 2011. Further, the fund has remained in the top-30 percentile of the ranking for seven quarters in a row, highlighting consistency in performance. Chintan Haria has taken over as the fund manager since May 2011. The total assets under management of the fund are Rs 1,251 crore as of quarter ended March.
To avail of tax benefits in ELSS, investors need to have a lock-in period of 3 years, the lowest among all comparable tax-saving investments. An ideal way to invest in ELSS is to start an SIP (systematic investment plan) from the beginning of the financial year, ie April, rather than investing a lump sum amount towards the end of the year. SIPs help spread the market volatility over a 12-month period. Investors must, however, note that the New Direct Taxes Code, expected to be implemented from April 1, 2012, may not provide tax benefits to ELSS. Investors can, therefore, consider ELSS for the current financial year.
PERFORMANCE In absolute terms, an investment of Rs 1,000 in the fund at the time of its launch in August 1999 would have grown to Rs 12,534 as of April 28, 2011, visà-vis its peer set and benchmark (S&P CNX Nifty), which would have appreciated to Rs 7,710 and Rs 4,259, respectively, during the same period. The fund has returned 63 per cent higher than the peer set and close to 3times the sum returned by the benchmark index.
The fund's two-year return in terms of a compounded annual growth rate is 41 per cent vis-à-vis 29 per cent and 22 per cent by its peers and benchmark, respectively. The fund has also outperformed both its peers and benchmark on a 1year and 3-year basis.
RISK The fund has demonstrated its performance over the last five years with slightly higher standard deviation (31 per cent) vis-à-vis its peer set (29 per cent) and benchmark index (26 per cent) clearly providing higher risk-adjusted returns.
PORTFOLIO, DIVERSIFICATION The fund is well diversified across market capitalisations. The exposure to Crisil-defined largecap stocks has been 49 per cent over the last three years. The rest of the exposure has been in small and midcap stocks. The fund has had a 38 per cent exposure to the S&P CNX Nifty stocks over the last three years and 20 per cent to the CNX Midcap stocks over the same period.
Portfolio concentration is a measure of the relative proportions of different securities in a portfolio. CRISIL's assessment of industry and company concentration of equity funds is critical to assess risk mitigation in portfolio construction.
The fund is well diversified in terms of its exposure per stock. The fund's portfolio held an average of 58 stocks over a three-year period. The fund is moderately concentrated in terms of industries. The average three-year exposure in the top-three sectors amounts to nearly 30 per cent.
INVESTMENT STYLE The fund's average equity exposure over the last three years is close to 95 per cent while cash and cash equivalents have been around 6 per cent. It has retained several stocks in its portfolio over the last three years. Some of these are Reliance Industries, Cadila Healthcare and Corporation Bank.
Over the last three years, financial services has been the most preferred sector of the fund, with an average exposure of 16 per cent. The fund has been an overweight in this sector vis-à-vis the benchmark. Energy and industrial manufacturing constitute the next highest exposures, with an average 13 and 10 per cent exposure, respectively, over the last three years. The fund has been an overweight in industrial manufacturing vis-à-vis the benchmark, while it has been underweight in energy, information technology, metals and telecom over the last three years.
