A relatively recent entrant to the tax-planning category, this fund has beaten its benchmark in all years except the first one after launch. It has also earned a four-star rating for the last three years. The fund has a higher-than-category allocation to mid-cap stocks, which have made up anywhere between 30 and 55 per cent of the portfolio in recent years. Large caps have accounted for 40-60 per cent and the allocations seem to be a result mainly of bottom-up stock choices.
The fund is managed on the basis of a growth-at-a-reasonable-price philosophy. It does take both cash and debt calls on occasion. The cash/debt positions, which rose to 18 per cent in mid 2015, have since been tempered to about 10.5 per cent. The fund believes in identifying companies by forecasting earnings based on a deep understanding of the industry-growth potential and interaction with company managements.
The fund has beaten its benchmark by sizeable margins over three and five years, though one-year returns place it in the middle of the category. The fund was launched after the big bear market of 2008 and has therefore encountered only one down year in its history, but it did navigate 2011 pretty well. While faring well against its benchmark, the fund hasn't been a huge category outperformer. In 2009, 2011 and 2014, its returns were either below or matched those of the category average.
It's a conservative tax-planning fund, but investors can take smaller exposures until a longer track record is at hand.
Top 10 Tax Saver Mutual Funds to invest in India for 2016
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1. BNP Paribas Long Term Equity Fund
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7. DSP BlackRock Tax Saver Fund
8. Reliance Tax Saver (ELSS) Fund
9. Religare Tax Plan
10. Birla Sun Life Tax Plan
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