Franklin India Taxshield Fund

5 Value Research
Change from previous, NAV as on Oct 09, 2015
Category: Equity: Tax Planning
Assets: R 1,810 crore (As on Sep 30, 2015)
Expense: 2.43% (As on Mar 31, 2015)
Investment Objective

The scheme seeks medium to long term growth of capital, with income tax rebate. The scheme invests in equities and there is an exposure to PSU Bonds and debentures and Money Market instruments.

Fund Managers
+ Anand Radhakrishnan since Apr 2007
+ Anil Prabhudas since Feb 2011
As on Aug 21, 2015

Given that tax-saving funds usually have no fixed mandate, funds in this category often take on significant risks in the form of mid- and small-cap allocations. This can backfire in a falling market. Franklin India Taxshield has remained immune to this trend, sticking to a large-cap tilt through ups and downs of the market.

The fund's high returns of 26 per cent since launch and nearly 20 per cent in the last ten years are all the more impressive when seen in this light. The fund has never slipped below three stars in the last ten years and has retained a four-five star rating in the last five years. A focus on buying quality large caps or emerging large caps at a reasonable price is the cornerstone of the fund's strategy.

The fund's five-year return of 18.6 per cent is ahead of the category by 5.4 percentage points. An analysis of year-on-year returns shows that the fund fares its best when markets are choppy or correcting. It has proved excellent at protecting downside. In rising markets, the fund beats its benchmark but tends to trail its more aggressive peers by a couple of percentage points.

The key to this performance lies in the fund's 65-70 per cent large-cap allocations at most times. Mid caps can make up 25-35 per cent of the portfolio. But the fund tends to reduce this proportion if valuations heat up.

Franklin India Taxshield is the ideal buy for the conservative equity investor who would like his tax breaks with a less bumpy ride.

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