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Mutual Fund Review: Taurus Tax Shield

 

 

Taurus Tax Shield has seen a turnaround in performance since 2007, but still remains a volatile offering…

The fund has seen a turnaround in its performance since 2007 and has delivered impressively during market rallies since then.


The portfolio is also more diversified. It contained its downfall to an average level in 2008 but is still one of the most volatile offerings in this category. Bold investors can look at this fund.

 

Strategy


The fund manager invests across the market capitalisation and sectors. The selection of stocks is made on the basis of long-term business prospects and value creation.

Fund Insight


Launched in March 1996, the fund was a laggard with just two annual outperformances. Concentrated stock bets and high exposure to mid and small caps led to it being hit harder during market downturns. The number of stocks in the portfolio never exceeded 20 and it was not rare to see the top 5 holdings account for around 60 per cent of the portfolio.

After being the worst performing tax planning fund in 2006, it grabbed the top slot in 2007, thanks to concentrated stock and sector bets and high exposure to mid and small caps.

Once the market started its southward journey in January 2008, the fund turned into a more diversified offering. The number of stocks increased and allocation to the top holdings decreased. Coupled with increased exposure to large caps and high cash positions, the fund limited its fall to an average level.


There has been a lot of reshuffling in the fund's portfolio as it has seen frequent fund manager changes. Sadanand Shetty, who joined in May 2010, cut down exposure to Engineering and increased it to Financial Services.

 

Portfolio Insight


A diversified offering of 38 stocks with the top 5 cornering 26 per cent of the portfolio. Prior to 2008, a clear bias towards mid and small caps was evident. More recently, a multi-cap approach has been adopted and the portfolio changes according to market conditions. Large-cap exposure has moved from 62 per cent (December 2008) to 25 per cent (October 2009) and now stands at close to 74 per cent.

 

Risks


The track record shows a lot of aggression in terms of concentrated sector and stocks bets. In September 2007, Financial Services accounted for around half (52.43%) the fund's portfolio. Such stances could backfire tremendously.

 

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