Skip to main content

Canara Robeco Tax Saver Fund - A Tax Saving Fund

Canara Robeco Tax Saver Fund Invest Online
 
 
 
Tax Planning Strategies article in Advisorkhoj - Tax Savings and Wealth Creation makes Canara Robeco Tax Saver win win for investors

Canara Robeco Equity TaxSaver is one of the top performing equity linked savings schemes (ELSS) in the country. 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 that of 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 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 (NAVs as on Feb 26)

Tax Planning Strategies - Comparison of annualized returns between ELSS and Large Cap Funds Categories

Canara Robeco Equity TaxSaver, which is one of the oldest schemes in the ELSS category, is also 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 Canara Robeco Equity TaxSaver scheme and the ELSS Category (NAVs as on Feb 26)

Tax Planning Strategies - Comparison of annualized returns between Canara Robeco Equity TaxSaver and ELSS category

Canara Robeco Equity Tax Saver – 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. Launched in 1993, the Canara Robeco Equity Tax Saver fund is one of the oldest tax saving mutual fund schemes. The scheme is open both for growth and dividend plans. The fund has an AUM base of over Rs 600 crores, with an expense ratio of 2.33%. The fund manager of this scheme is Krishna Sanghvi. Under his watch the fund has delivered excellent returns. The current NAV (as on Feb 26 2014) is 30.5 for the growth plan and 18.0 for the dividend plan.

Portfolio Construction

The fund manager has large cap and high growth potential focus for his portfolio. From a sector perspective, the portfolio has a BFSI bias, with substantial allocations also to IT, Automobile, FMCG and Healthcare. This portfolio construction enables the fund manager to capture superior returns when markets rally, at the same time limit downside potential during downturns. In terms of company concentration, the portfolio is very well diversified with its top 5 holdings, TCS, Infosys, HDFC Bank, ICICI Bank and Reliance Industries accounting for less than 26% of the total portfolio value.

Tax Planning Strategies - Sector Composition and Top 5 Holdings of Can Robeco Equity TaxSaver

Risk & Return

In terms of risk or volatility measures, the annualized standard deviation of monthly returns for three years is 14.4%, which is lower than the volatility of ELSS category. While the volatility of the fund is lower than the category average, the annualized returns over the same periods are better than the category, indicative of strong risk adjusted returns performance from this fund. An investment of Rs 1 lakh in the growth plan of Canara Robeco Equity TaxSaver on its inception in Mar 1993 would have by now grown more than Rs 16 lakhs. Clearly in addition to saving taxes, this fund has helped in creating wealth for its investors.

Comparison with Peer Set

A comparison of annualized returns of Canara Robeco Equity TaxSaver fund versus its peer set over various time periods shows why this fund is considered a chart topper amongst its peers. The fund has beaten all its peers, except ICICI Prudential Tax Plan, over the long term. See chart below for comparison of annualized returns over one, three and five year periods. NAVs as on Feb 26 2014.

Tax Planning Strategies -  comparison of annualized returns over one, three and five year periods for Robeco Equity TaxSaver

Dividend Payout Track Record

Canara Robeco Equity TaxSaver fund Dividend Plan has an excellent dividend payout track record. In its 21 year history, the fund has paid dividends every year, except 1997-98, 2002 and 2009.

Tax Planning Strategies - Dividend Payout history of Robeco Equity TaxSaver

SIP Returns

The chart below shows returns as on Feb 26 2014 (NAVof 30.5) of Rs 5000 monthly SIP in the Canara Robeco Equity TaxSaver fund Growth Plan, for respective years since inception (in March 1993). The SIP date has been assumed to first working day of the month. The amounts are shown in Rs lakhs.

Tax Planning Strategies - SIP returns as on Feb 21 2014 of Rs 5000 monthly SIP in Robeco Equity TaxSaver since 1999

The chart above shows that a monthly SIP of Rs 5000 started on the first working day of January 2000 would have grown to nearly Rs 16 lakhs, while the investor would have invested in total only about half of that amount. This would imply an internal rate of return of more than 14%, 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 from inception of the fund, his or her corpus would have grown close to Rs 78 lakhs, with an investment of little over Rs 12.5 lakhs, demonstrating the power of compounded returns from SIPs in this fund.

The Canara Robeco Equity TaxSaver fund has delivered over 20 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. 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. However, investors should 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 Canara Robeco Equity TaxSaver fund is suitable for their investment portfolio.

-----------------------------------------------
Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds

Top 10 Tax Saving Mutual Funds to invest in India for 2016

Best 10 ELSS Mutual Funds in india for 2016

1. BNP Paribas Long Term Equity Fund

2. Axis Tax Saver Fund

3. Franklin India TaxShield

4. ICICI Prudential Long Term Equity Fund

5. IDFC Tax Advantage (ELSS) Fund

6. Birla Sun Life Tax Relief 96

7. DSP BlackRock Tax Saver Fund

8. Reliance Tax Saver (ELSS) Fund

9. Religare Tax Plan

10. Birla Sun Life Tax Plan

Invest in Best Performing 2016 Tax Saver Mutual Funds Online

Invest Online

Download Application Forms

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

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

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

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

Popular posts from this blog

Post Office Deposits Interest Rates

Best SIP Funds to Invest Online   SIPs are Best Investments when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich For further information on Top SIP Mutual Funds contact  Save Tax Get Rich on 94 8300 8300 OR You can write to us at Invest [at] SaveTaxGetRich [dot] Com

Modern day balanced mutual fund approach

Buy Gold Mutual Funds Invest Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Call 0 94 8300 8300 (India)   In reality, most balanced funds have a strong tilt towards equity instead of a mix of equity and debt THERE are various types of mutual funds available to investors with specific features. Often investors have a particular idea about a specific type of funds in terms of their features and risks, but that is not what is actually available. Therefore, it is necessary for an investor to understand the actual position before picking up a fund. This requires some work on the part of the investor. One example can be the situation with balanced funds. Name is not representative: One of the first things that an investor has to understand is that the name of the fund is often not representative of its investment pattern. The name often represents only the aim of the fund, and not what it actually is.

How Tax Deducted at Source (TDS) works?

    THE tax season is here. And if you are an employee you can't blame your employer for deducting large chunks of money from your salary towards tax deducted at source ( TDS ), which he is legally obliged to do. Your bank will also deduct some percentage from your FD interest of Rs 10,000 or more towards TDS! So what is this TDS all about? How is it computed? Are there any changes this year? Read on... What is TDS? TDS reduces your taxable income and could even provide tax relief! The TDS collections account for 40 percent of the total taxes collected in the country. As the name suggests TDS is the amount of tax that is deducted at source in certain types of income . The TDS thus collected is deposited in the Government treasury within a specified time. How is it computed? Some of the types of income where TDS is applicable include salary, interest, rental fee, interest on securities, insurance commission, dividends from shares and UTI/Mutual Funds, commission and brokerage

Investment Strategy for Low Risk Investors

    Invest in Best Debt Funds Online   These financial strategies can help optimise the returns from safe investments   There are many reasons why investors prefer to be safe than sorry. Some of them can't stom ach the volatility that comes with stock investments. Others may have had a bad experience, which is why they want to stay away . The risk profile of an individual is determined by a combination of factors (see chart). Based on the factors that determine risk appetite, we have developed a risk tolerance test (see below). If your score puts you in the low-risk segment, here are some tips for you to optimise your returns. GO FOR TAX EFFICIENT INVESTMENTS Bank deposits are all-time favourites of those seeking low-risk instruments.They are easy to understand, widely available and anyone with a bank account can open one. Thanks to Netbanking, they also do not require paperwork. But bank deposits are tax inefficient because the interest earned is added to your income and taxed

What is price deflator?

What is price deflator? A defaltor is used to restate data measured over time to prices prevailing at a particular period or time to make it comparable. Essentially, a deflator removes the effect of inflation from the data. What is the role of price deflator in GDP calculations? Prices are continuously in a state of flux, but generally trend upwards over time. Therefore, even without an increase in the quantity of goods and services produced by an economy, price increase can give the impression of an increase in the gross domestic product, or GDP, the benchmark indicator of economic activity. Therefore, the impact of prices has to be removed at arrive at a true measure of the value of goods and services produced, or real economic growth. A deflator is used to reduce output estimates at current prices to what they would be if calculated with reference to prices in a particular year. Why is GDP deflator considered a good measure of inflation? The ratio between the GDP at current p
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