|Fund: Reliance Tax Saver|
Category: Equity Linked Savings Scheme – equity funds with a tax benefit under Section 80C
Benchmark: BSE 100
This fund has been putting up a fantastic performance recently. In 2012, it delivered an impressive return of 46%, making it the second-best performer in its category. Even its current 1-year return puts it amongst the top of the pile.
Though the fund house positions this offering as a large-cap oriented fund which aims to have a minimum 50% exposure to the top 100 companies by way of market capitalisation, it’s large-cap bias is not as distinct as some of its peers in the same space. Over the past 3 years, our research reveals that the average large-cap allocation has been at 54%, followed by mid caps (21%) and small caps (15%).
As mentioned above, the portfolio will have a minimum 50% exposure to BSE 100 (its benchmark) or the top 100 companies by way of market capitalization. The rationale to provide the leeway to invest in smaller companies is to grab hold of unique stock ideas which have a predominant growth bias and to use aggressive sector weights. As on December 2012, the top 3 sectors – Auto, Industrial Capital Goods and Industrial Products, cornered 43% of the portfolio.
The latest portfolio revealed that the fund has around 49 stocks, out of which just 21 have been in the portfolio for more than 2 years.
Though its mandate gives it the option of a flexible cash allocation right up to 25% of the portfolio, this will be followed only in extreme situations to counter out-of-the-ordinary market circumstances. In fact, cash allocation has often dropped to less than 1% of the portfolio’s allocation since the fund manager prefers to remain fully invested.
What you will find here is an actively managed portfolio, fully invested with strong sector bets.
This fund is part of our recommended list of funds as suggested by our research team.
To read the analysis on Reliance Tax Saver, click here.
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