Financial experts always suggest the investors to invest in for a long-term in any fund, and this way they not only generate capital but also accrue the benefit of compounding. A fund that has been offering such benefits to the investors is Tata India Tax Savings Fund. An ELSS category fund, it also offers tax rebate of Rs 1,50,000 per annum under Section 80C of the Income Tax Act, 1961. It has improved its performance in the past few years, therefore, it has been researched on its portfolio, strategies, returns, and risk measures. The details of this research have been provided in the article further.
An Outlook At Tata India Tax Savings Fund:
Investing majorly in equity and equity-related securities of various companies, it is an open-ended scheme with a statutory lock-in period of three years. It has also been investing a small amount of its total assets in debt and money market instruments.
Sector Allocation of Tata India Tax Savings Fund (G)
With an average market capitalisation of Rs 77,495.53 Cr, the fund is investing 52 companies currently. As we can see the sector allocation of Tata India Tax Savings Scheme, it is majorly investing in the defensive and sensitive areas of the economy. Overweight in financial, FMCG,
construction, services, and engineering sectors from its benchmark, it has provided more exposure to the defensive sector than its benchmark.
The portfolio turnover ratio of the fund is 30%, which shows that the fund management team follows the strategy of buy and hold in the portfolio. Beside this, it picks the growth stocks, with the mix of the top-down and bottom-up approach to provide the tax-free capital appreciation to the investors.
The fund managers pick the stocks of multiple businesses from the various market caps, which help it in earning regular earnings along with growth. They do not take a major risk by investing highly in the small caps but has given 10% to this segment.
Past Performance Analysis of Tata India Tax Savings Fund (G)
Tata India Tax Savings Fund growth is not a consistent performer, but in the long run, it has performed better than many of its peers. From the above table, if we look at the compounded returns from the past five, seven and ten years, it has outperformed its benchmark as well as other funds in the category.
If we look at the annualised returns of the fund, it has also capped the losses when the benchmark has given negative returns and provided positive returns. Over the past five years, it is continuously beating its benchmark to provide high and consistent returns to its investors. The alpha generated by the fund is in negative but has underperformed its category’s average.
Looking at the past performance, if an investor has invested the amount of Rs 1,000 in the fund through SIP mode on a monthly basis since its launch, the total amount invested would be Rs 2,63,000. However, the worth of this investment will be Rs 35,42,770, as on Sept 01, 2018 which shows the amount gets compounded with the rate of approximately 19% in all these years.
This shows that the fund could offer better returns to the investors in the long run. It invests into slightly bulky portfolio avoiding concentration in a particular sector adopting the balanced approach.
The fund is suitable for the investors who are looking for tax savings under the Income Tax Act, 1961. It can provide an exemption from income tax up to Rs 1.50 Lacs every year. You can invest in the fund via SIP and lumpsum mode, with a minimum amount of investment of Rs 500.
Looking for investing in Tata India Tax Savings Fund? Read the article above providing all the details regarding scheme.
Dishika is a financial expert as well as tax consultant working with MySIPonline. She keeps researching on the funds which offer tax benefits to investors.