Performance:
Religare Tax Plan, in its existence of almost five years, has been able to establish itself as one of the better performing tax-saving funds in the country. As apparent from its performance track record, the fund’s forte is negotiating volatility and protecting investors from the downside. Its best performances came in the years 2008 and 2011(till November), when the markets fell sharply. On both the occasions it ended in the top quartile. In both the years, the fund was overweight in Consumer Defensive sector (monthly average of 15.5% in 2008 as against the category’s monthly average of 8.3%; 12.4% against the category average of 6.9% YTD till November 2011), which performed well during these periods. On the other hand, it was underweight in Basic Materials sector in 2008 and YTD in 2011, which was among the worst performing sectors in both the years. Conversely, in the years 2007, 2009 and 2010, when markets witnessed an uptrend, the fund saw its performance dipping due to its similar approach. But it still managed to occupy a position in the second quartile in all the three calendar years, due to its heavy exposure to certain sectors which performed well then. The fund also boasts of a superior performance on the basis of its trailing returns. It outperformed 89% of its category peers over a one-year period and 79% of its category peers over a three-year period (ended November 2011).
Rating & Risk:
The fund has a Morningstar overall rating of 4-stars. Moreover, while it enjoys a “Below Average” Morningstar Risk Rating, it has an ‘Above Average’ Morningstar Return rating over three-years. This signifies that despite taking relatively less risk, the fund is able to deliver superior returns to investors. The fund’s competency in tackling volatility is further substantiated by its lower standard deviation of 23.1% as against the category average of 25.8% over a three-year period. Furthermore, the fund’s downside capture ratio during that period is also impressive. It captured only 72% of the downside of the category benchmark index (BSE 200), compared to a relatively higher 87% of the downside suffered by a typical peer fund.
Portfolio:
Currently, given its higher exposure to large cap stocks, the fund falls in the ‘Large-Growth’ section of the Morningstar style box. However, in the past, the fund has held higher exposure to mid and small cap stocks. It started off with higher exposure to mid/small cap stocks, and continued to do so till end of 2008. It was in the first quarter of 2009 that the fund started increasing allocation to large cap stocks. Since then, it has maintained higher exposure to large cap stocks. The fund does not shy away from taking sectoral bets. It has an affinity for Consumer Defensive, Consumer Cyclical and Financial Services sectors, and is usually overweight in them as compared to category peers. Similarly, the fund tends to be underweight in Basic Materials and Technology sectors. The fund has also usually refrained from taking big cash calls in its portfolio.
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