Part I: Want your money to grow at 108%?
Part III: New tax saving funds
Yesterday, we spoke about why tax-saving funds are a good investment. Today, we look at five good ELSS funds...
All the returns and the NAVs are as of December 1, 2006
Birla Equity Plan
Net Asset Value: Rs 57.42
Star rating: 4 stars
This fund was launched in 1999. With most of its investments in tech stocks, it lost heavily in 2000 and 2001. Since then, however, its fortunes have changed.
The year 2003 was exceptional for this fund; it gave a return of 161%. The next year, it delivered just 24.67%; the average return from other funds in this category was 30%. In 2005, it did better than the average return.
This year, the fund's returns have been higher than the category average. Its five-year returns are nearly 52% as against the average category returns of 42.64%.
Though relatively small-sized, this fund has shown the ability to identify stock trends and make swift moves to generate returns.
Franklin India Tax Shield
Net Asset Value: Rs 127.53
Star rating: 4 stars
Launched in 1999, this fund has been an average performer.
The three-year and five-year returns -- 43.08% and 42.81% respectively -- show that the fund has marginally beaten the category average of 42.23% and 42.64%.
The fund invests mostly in large-cap stocks. As a result of its large-cap orientation, when the market falls, this fund does not fall as heavily. For the same reason, this fund will not rise dramatically either.
This is why many conservative investors who do not want to take a risk like the fund.
As on October 2006, the fund had around 72% of its stock investments in large-caps and 28% in mid-caps. It has no investments in small-cap stocks.
HDFC Taxsaver
Net Asset Value: Rs 148.677
Star rating: 5 stars
This fund is a great performer. It was the topmost performing fund in 2001. It slipped a bit the next year, but has since picked up. In 2004 and 2005, it was the second best fund in its category. Last year, when the average fund return in this category was 51.66%, this fund delivered 74.84%.
The fund's one-year, two-year, three-year and five-year returns are ahead of the category average.
According to the October 2006 portfolio, this fund has invested in large-caps (53.98%), mid-caps (33.05%) and small-caps (12.97%).
Out of its total investments, it is most heavily invested in the auto sector with 18.29% in auto stocks.
This year, the fund manager has limited his investments to 31-35 stocks.
Magnum Taxgain
Net Asset Value: Rs 55.2
Star rating: 4 stars
This fund had a miserable past but has steered clear of it. Magnum Taxgain has also changed several fund managers since November 2005, but this has not affected its excellent performance.
Its one-year and five-year returns are ahead of the category average by 12% and 17%. Its two-year return is 80.31% (category average is 46.33%) and its three-year return is 72.36% (category average is 42.32%).
It has been the top-most performing fund in this category for the last two years.
The fund has invested heavily in mid-caps, but has been slowly reducing it this year and increasing its investment in large-cap stocks. Now, the fund is mostly invested in mid-caps followed by large-caps.
Pru ICICI Tax Plan
Net Asset Value: Rs 91.69
Star rating: 3 stars
This fund gives a high return, but it is also a high risk fund; it is not meant for conservative investors.
Its one-year return of 31.75% is less than the category average of 36.03%. But its two-year, three-year and five-year returns outperform the category average.
As on October 2006, it had just 4.66% of its total investments in large-caps. It is heavily invested in mid-caps (44.91%) and small-caps (44.64%).
The investments are diversified across 50 stocks and the topmost sector -- healthcare has around 14% invested in it.
Part I: Want your money to grow at 108%?
Part III: New tax saving funds
Value Research is a mutual fund research organisation. A detailed analysis of these funds appeared in the November issue of its magazine Mutual Fund Insight.