Skip to main content

Best ELSS Fund for Last 5 Years

Download Tax Saving Mutual Fund Application Forms

Invest In Tax Saving Mutual Funds Online

Buy Gold Mutual Funds

Leave a missed Call on

94 8300 8300

ICICI Prudential Tax Plan

ICICI Prudential Tax Plan is the best equity linked savings scheme in the last five years, on the basis of annualized returns. Equity Linked Saving Schemes (ELSS) is one of the most popular investments allowed under Section 80C, since the investors can avail double benefits of capital appreciation and tax savings. An ELSS is a diversified equity scheme with a lock in period of three years from the date of the investment. If you invest in an ELSS through a systematic investment plan (SIP), each investment will be locked in for 3 years from their respective investment dates. From tax purposes, both long term capital gains and dividends from ELSS are tax free.

Over various periods ELSS has generated slightly better returns than Large Cap Funds as a category. The lock-in period of three years in ELSS is advantageous from a fund management perspective, since the fund managers are free from redemption pressures during the lock-in period and therefore are able to hold the stocks in their portfolio for a longer period of time, to generate superior returns. See the chart below, for the comparison of annualized returns over three, five, seven and ten year periods, between ELSS and the large cap funds categories

 

ICICI Prudential Tax Plan, which complete 15 years this August, is clearly a top performer in this category across several time periods. See the chart below, for the comparison of annualized returns over one, three, five and ten year periods, between ICICI Prudential Tax Plan (Growth) and the ELSS Category

 

ICICI Prudential Tax Plan – Fund Overview

This fund is suitable for investors looking for tax planning investment options under 80C with the expectation of long term capital appreciation. However, since this is essentially an equity oriented mutual fund, it is subject to market risk and volatility, compared to other tax saving instruments like PPF, NSC etc. However, equities as an asset class generate superior returns over the long term and serves as an effective hedge against inflation. As such, the fund is suitable for investors planning for long term financial objectives like retirement planning, children's education, marriage etc. The ICICI Prudential Tax Plan was launched in 1999. The scheme is open both for growth and dividend plans. The fund has an AUM base of over Rs 1,500 crores, with an expense ratio of 2.24%. ICICI Prudential is one of the largest asset management companies in the country. The fund manager of this scheme is Chintan Haria since 2013. Previously the fund was managed by ICICI Prudential CIO Sankaran Naren, under whose watch the fund had delivered excellent returns. Chintan is following the investment approach and process of Sankaran. In the brief time that Chintan has been the fund manager of this scheme, the fund has continued to deliver strong result. The current NAV (as on Mar 16 2014) is 178.1 for the growth plan and 18.2 for the dividend plan.

Portfolio Construction

The fund manager has a multi cap and high growth potential focus for his portfolio. The fund manager identifies stocks and sectors with attractive valuations. From a sector perspective, the portfolio has a bias for cyclical sectors like BFSI, Energy and Metals, but it also has substantial allocations to defensive sectors like IT and Healthcare. This portfolio construction enables the fund manager to get good returns across different market conditions. In terms of company concentration, the portfolio is very well diversified with its top 5 holdings, ICICI Bank, Infosys, HDFC Bank, NDMC and Reliance Industries accounting for only 25% of the total portfolio value.

 

Risk & Return

From a risk perspective, the volatility of the fund is in line with the ELSS category. The annualized standard deviations of monthly returns of ICICI Prudential Tax Plan for three to ten year periods are in the range of 17% and 28% respectively, which is slightly on the higher side relative to some of its peers. However on a risk adjusted return basis, as measured by Sharpe Ratio, the fund has outperformed the ELSS category. See charts below for comparison of volatilities and Sharpe ratios between ICICI Prudential Tax Plan and ELSS funds category

 

Comparison with Peer Set

A comparison of annualized returns of ICICI Prudential Tax Plan versus its peer set over various time periods shows why this fund is considered a chart topper. The fund has beaten all its peers in the three and five year time periods, and is second only to SBI Magnum Tax Gain 93 scheme by only a small margin over a 10 year period. See chart below for comparison of annualized returns over three, five year and 10 year periods. NAVs as on Mar 16 2014.

 

Dividend Pay out Track Record

ICICI Prudential Tax Plan Dividend Option has an excellent dividend payout track record. In its nearly 15 year history, the fund has paid dividends every year, except 2001 – 02 and 2010. The fund has paid dividends even during the market downturns in 2008 and 2011. This demonstrates the good track record of the fund even under difficult market conditions.

SIP and Lump Sum Returns

The chart below shows returns as on Mar 16 2014 (NAV of 178.1) of Rs 5000 monthly SIP in the ICICI Prudential Tax Plan Growth Option, for respective years since inception (in August 1999). The SIP date has been assumed to first working day of the month. The amounts are shown in Rs lakhs.

 

The chart above shows that, a monthly SIP of Rs 5000 from the first working day of the month since inception would have grown to nearly Rs 50 lakhs, while the investor would have invested in total only about Rs 8.6 lakhs. This would imply an internal rate of return of more than 19%, which is much higher than returns of some other tax saving investments (e.g. PPF) in the same period. If the investor started his SIP ten years back, his or her corpus would have grown to nearly Rs 14 lakhs, with an investment of only Rs 6 lakhs.

If the investor had invested Rs 1 lakh in the NFO, his or her investment would have now grown to Rs 17.8 lakhs.

Conclusion

The ICICI Prudential Tax Plan has delivered nearly over 15 years of strong and consistent performance. The fund has established itself as a top performer tax saving scheme with great track record of investment returns and dividends. It is a top pick for investor's tax saving portfolios. ICICI Prudential AMC is one the largest AMCs in the country and funds from the ICICI Prudential stable are among top performers across several mutual fund categories. Investors planning for tax saving investments can consider buying the scheme through the systematic investment plan (SIP) or lump sum route with a long time horizon, for long term financial objectives. The fund has an excellent dividend pay out track record, and as such may appeal to investors who prefer dividends. Since the fund manager is relatively new, investors should monitor the performance of the fund to see if the fund manager can continue to deliver good returns. Investors should also ensure that the objectives of the fund are aligned with their individual risk profiles and time horizons. They should consult with their financial advisors if ICICI Prudential Tax Plan fund is suitable for their investment portfolio.

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

Leave a missed Call on 94 8300 8300

Leave your comment with mail ID and we will answer them

OR

You can write back to us at

PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

---------------------------------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Franklin India Bluechip
      4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds Invest Online

      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
      4. Birla Sun Life Front Line Equity Fund
      5. Franklin India Prima

C. Mid and SmallCap Funds Invest Online

      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
      5. Birla Sun Life Dividend Yield Plus
      6. SBI Emerging Businesses Fund
      7. HDFC Mid-Cap Opportunities Fund
      8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds Invest Online

      1. DSP BlackRock MicroCap Fund
      2. Franklin India Smaller Companies

E. Sector Funds Invest Online

      1. Reliance Banking Fund
      2. Reliance Banking Fund
      3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

      1. DSP BlackRock Tax Saver Fund
      2. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds Invest Online

      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund
      4. Birla Sun Life Gold

H. International funds Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF

Popular posts from this blog

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...
Read more

Mutual Fund Review: HDFC Index Sensex Plus

  In terms of size, HDFC Index Sensex Plus may be one of the smallest offerings from the HDFC stable. But that has not dampened its show, which has beaten the Sensex by a mile in overall returns   HDFC Index Sensex Plus is a passively managed diversified equity scheme with Sensex as its benchmark index. The fund also invests a small proportion of its equity portfolio in non-Sensex scrips. The scheme cannot boast of an impressive size and is one of the smallest in the HDFC basket with assets under management (AUM) of less than 60 crore. PERFORMANCE: Being passively managed and portfolio aligned to that of the benchmark, the performance of the index fund is expected to follow that of the benchmark and in this respect, it has not disappointed investors. Since its launch in July 2002, the fund has outperformed Sensex in overall returns by good margins.    While every 1,000 invested in HDFC Index Sensex Plus in July 2002 is worth 6,130 now, a similar amount invested in Sensex then wo...
Read more

IDFC - Long term infrastructure bonds - Tranche 2

IDFC - Long term infrastructure bonds What are infrastructure bonds? In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 (" Income Tax Act ") to provide for income tax deductions for subscription to long-term infrastructure bonds and pursuant to that the Central Board of Direct Taxes passed Notification No. 48/2010/F.No.149/84/2010-SO(TPL) dated July 9, 2010. These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly. Long term infrastructure Bonds by IDFC IDFC issued an earlier tranche of these long term infrastructure bonds on November 12, 2010. This is the second public issue of long-te...
Read more

Section 80CCD

Top SIP Funds Online   Income tax deduction under section 80CCD Under Income Tax, TaxPayers have the benefit of claiming several deductions. Out of the deduction avenues, Section 80CCD provides t axpayer deductions against investments made in specific sector s. Under Section 80CCD, an assessee is eligible to claim deductions against the contributions made to the National Pension Scheme or Atal Pension Yojana. Contributions made by an employer to National Pension Scheme are also eligible for deductions under the provisions of Section 80 CCD. In this article, we will take a look at the primary features of this section, the terms and conditions for claiming deductions, the eligibility to claim such deductions, and some of the commonly asked questions in this regard. There are two parts of Section 80CCD. Subsection 1 of this section refers to tax deductions for all assesses who are central government or state government employees, or self-employed or employed by any other employers. In...
Read more

ULIP Review: ProGrowth Super II

  If you are interested in a death cover that's just big enough, HDFC SL ProGrowth Super II is something worth a try. The beauty is it has something for everybody — you name the risk profile, the category is right up there. But do a SWOT analysis of the basket, and the gloss fades     HDFC SL ProGrowth Super II is a type-II unit-linked insurance plan ( ULIP ). Launched in September 2010, this is a small ticket-size scheme with multiple rider options and adequate death cover. It offers five investment options (funds) — one in each category of large-cap equity, mid-cap equity, balanced, debt and money market fund. COST STRUCTURE: ProGrowth Super II is reasonably priced, with the premium allocation charge lower than most others in the category. However, the scheme's mortality charge is almost 60% that of LIC mortality table for those investing early in life. This charge reduces with age. BENEFITS: Investors can choose a sum assured between 10-40 times the annualised premium...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now