Skip to main content

Mutual Fund Review: HDFC Taxsaver

HDFC Taxsaver has returned an annualised yield of about 30%, which is higher than that of all the other schemes with similar tenure in its category

 

   Launched in 1996, HDFC Taxsaver has been one of the oldest schemes and the second-largest in its category. The fund has witnessed growth even when the mutual fund industry in general was facing redemption pressure. Its asset under management (AUM) has tripled in the past one-and-a-half year to 2,980 crore.

PERFORMANCE:

During its 15-year long tenure, HDFC Taxsaver has underperformed major market indices and its benchmark, the S&P CNX 500, only in three years. Incidentally, the period of underperformance was just before the two big crises. However, it cushioned the downfall well during the crisis and also managed to recover swiftly.


   For instance, just before the 2001 dot-com bust, the fund fell in its performance in 2000. Subsequently, it underperformed in 2006 and 2007, which was before the global financial crisis of 2008.


   The scheme has been a top performer among the category of ELSS schemes, beating the market indices by huge margins. For instance, in 1999, HDFC Taxsaver generated outstanding 143% returns as against 63-67% returns of the Sensex and the Nifty. Even in 2003, the mid and small-cap orientation of the fund enabled it to generate 121% return as against 72% growth in the Sensex and the Nifty and 98% by the scheme's benchmark index S&P CNX 500.


   In 2008 also the decline in the fund's net asset value (NAV) by about 52% was at par with the decline in the broader market indices, but slightly better than its benchmark. In 2009, it delivered 100% returns as against 80% rise in its benchmark.


   The scheme has generated absolute gains of about 28% over the past three years, which is far superior to 1% returns by the Sensex and the Nifty over the past three years. The average return of all the schemes in its category has also been only 10%.

PORTFOLIO:

The portfolio of HDFC Taxsaver, underwent a restructuring in 2006, which included slashing out high beta metal sector completely. Also a significant number of small-cap stocks were shed off reducing the risk quotient of the portfolio.


   HDFC Taxsaver's portfolio is well diversified to incorporate an average of about 50 stocks across sectors. The fund has a clear bias towards large-cap stocks with almost 70% of its equity portfolio in large caps.


   For the sectoral allocation, the fund is highly bullish on financial, energy and healthcare sectors, which together constitute almost half of the total portfolio. The scheme has been bullish on healthcare since early 2007 when there were hardly any takers for this sector. In 2009-10, the outperformance of this sector on bourses gave a boost to the scheme's returns.


   Real estate, NBFC and cement are a few sectors that the fund has always avoided. This pinched the returns in 2007, when infrastructure was at its peak, but the strategy paid off in the downturn, giving a good cushioning to the returns.


   Another interesting aspect is that the fund has been fully-invested throughout. Fund manager rarely take huge cash calls. Even in downturns, the maximum cash-in-hand of the fund manager was 10%. Also, the portfolio turnover ratio of this fund is only 24%, implying, low churning of the portfolio. In fact, the portfolio comprises almost 20 stocks that fund has been holding for over three years. These include some prominent mid-caps like Apollo Tyres, Crompton Greaves, Dabur India and Sun Pharmaceuticals.

OUR VIEW:

Though fund's returns have been low in the recent past, it has not disappointed long-term investors. The fund has returned an annualised yield of about 30% since inception, which is higher than all the other schemes with similar tenure in this category.

 

Popular posts from this blog

Mutual Fund Exit Load Changes

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 Mutual Fund Exit Load Changes AMCs don't communicate about any change in exit load directly with investors, but do update on their website   The exit load applicable to your investments is the load which existed at the time when you invested in the particular fund. Any subsequent changes in the exit load will not be applicable to your investments.   However, Asset Management Companies ( AMCs ) periodically publish addendums in the newspapers, which state any change in exit loads of specific schemes managed by them. Such changes are also posted on their websites. However, a direct communication to an investor is not made, considering the costs involved in doing so. In their own interests, investors should not only track the performance of the funds they i...

Atal Pension Yojana contribution Tax Benefit for spouse

Contributions to Atal Pension Yojana (APY) are eligible for the same tax benefits as the NPS. This means that the contributions can be claimed under Section 80CCD (1B). The current limit for Section 80CCD (1B) is   Rs   50,000, over and above the   Rs   1.5 lakh limit under Section 80C. Section 80 CCD (1) is a different one, meant to cover employers' contribution towards NPS . You cannot get tax benefit by investing in the name of your spouse under Section 80 CCD . ------------------------------ ----------------- 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 Saver 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. Religare Tax Plan 4. DSP BlackRock Tax Saver Fund 5. Franklin India TaxShield 6. ICICI Prudential Long Term Equity Fund 7. IDFC Tax Advantage (ELSS) Fund 8. Birla Sun Life Tax Relief 96 9. ...

Birla Sun Life Mutual Fund Launches Birla Sun Life NIFTY ETF

Birla Sun Life has launched a new fund namely, Birla Sun Life Nifty ETF, an open ended exchange traded fund. The new fund will be open for subscription from 4th July to 18th July 2011, at an offer price of Rs 10 per unit. The investment objective of the scheme is to generate returns that closely correspond to the total returns of securities as represented by S&P CNX Nifty, subject to tracking errors. No exit load will be charged under the scheme. The performance of the scheme will be benchmarked against S&P CNX Nifty and will be managed by Satyabrata Mohanty.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   1) DSP BlackRock Mutual Funds: http://prajnacapital.blogspot.com/2011/05/buying-dsp-blackrock-mutual-funds.html   2) Reliance Mutual Funds: http://prajnacapital.blogspot.com/2011/06/buying-reliance-mutual-funds-online.html   3) Birla Sunlife Mutual Funds: http://prajnacapital.blogspot.com/2011/...

Mutual Fund Reivew: Birla Sun Life Asset Allocation Conservative

Birla Sun Life Asset Allocation Conservative has numbers on its side to prove its credibility… Don't be surprised to find this Fund of Funds ( FoF ) in our recommendations. It has earned its place. And despite the difference in the structure of the product, there is no arguing with the numbers.   Of the total 6 years of its existence, the fund has been among the top 10 funds in its category in four of them. Last year it put up an average show and the only year it underperformed its peers was in 2008.   One aspect to look at when investing in an FoF is the expense ratio. The expense ratio of an FoF is capped at a lower limit of 0.75 per cent (2.50% for an actively managed fund). However, the FoF not only has its own expense (though lower) but even the expense ratio of the fund it is investing into. Fortunately, the fund manager takes that into account. "Expense is one of the important criteria used for fund selection and is the main reason for our investment in BSL Ind...

Short-Term Investment Options in Mutual Funds

Mutual funds offer liquid funds and ultra short term funds in the debt category, which are suitable for short investment periods. Ultra short-term funds were earlier known as liquid plus funds. Liquid funds invest in money market instruments with a maturity of 91 days or less. However, there are no such restrictions for ultra short-term funds. Who should invest in these? These are open-ended schemes. Investors with a short investment horizon or with surplus cash and low risk appetite should look at these. These could include corporate as well as retail investors. Those interested in staying invested for less than 15 days can opt for liquid funds. Retail investors who want to remain invested for two-four months, can look at ultra short-term funds. The short duration for both liquid and ultra short-term funds shields them from any interest rate volatility.   What kind of returns do they offer? In terms of an investment period less than 15 days, these funds are comparable to a ba...
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