Long-term Player

The 7-year itch has not hit this fund, with its staggering asset base of Rs 10,400 crore in December 2016, when it completed seven years since its launch. At about 17.5 per cent annualised returns; this fund could put the performance of several diversified equity funds to shame. Since its inception in 2009 December, the fund has done well across market cycles, rallying strongly during upsides and containing downsides during weak phases of the market. At times, when the benchmark has lost during the bear phase of the market, this fund has made gains over the benchmark and peers. 

Strategy

This fund intends to generate income and long-term capital appreciation from a portfolio of equity and equity-related securities. It can invest up to 20 per cent in debt and money market instruments. The fund manager builds the portfolio by investing in companies that have a scalable business and have a high return on capital. The fund adopts a growth investing strategy and does not mind paying a premium for quality companies.

Its top three holdings include HDFC and Kotak Mahindra Bank besides HDFC. All of them are relatively costlier than most peers but have consistently registered good growth. Focus on large-cap stocks is yet another feature which ensures safety and liquidity, which are vital for a tax saving fund.

Further, a buy-and-hold approach by the fund manager reduces portfolio churn, which has helped the fund keep its expense ratio low compared with most peers. Likewise, timely exits from losing stocks like Tree House Education & Accessories also helped. A portfolio of 40 stocks is an optimum number, but given the rising assets of this fund, there will be need to increase the number of stocks in its portfolio, which could test its performance. If you are still looking to exhaust your Section 80C investment; this could be a fund to consider. 

olmdesk@outlookindia.com