Principal Tax Savings has come of age to emerge as a compelling option in the ELSS category. The fund has been rated four star since April 2006 (August was only exception when it was rated three star), on the back of robust returns generated over the period. The fund has consistently beaten the category average over the one-year, three-year and five-year period.
Its one year returns (as on June 20, 2007) of 60.45 per cent places it the second best after Principal Personal Tax Saver.
In fact the performance of the fund for the past one year has been better than the largest fund of the category - Magnum Tax Gain. In 2006, the fund's return of 28 per cent placed it in the league of the category beaters and the fund was ranked third amongst 23 funds. Compare this to its position in 2005 - 13th out of 20 funds.
A small fund, at a corpus of Rs 198 crore, it maintains a portfolio of 35-40 stocks. The fund generally invests in mid cap and small companies and its exposure to such companies increased to 70 per cent in May 2007 from around 66 per cent in April.
The fund's top holding is Phoenix International, which it bought it in April last year. In Phoenix International, the fund has been steadily increasing its exposure. The stock is its top holding since January this year. The fund's top five holdings constitute around 23.37 per cent of its assets. Since December 2006, the fund has doubled its exposure to metal and metal products sector while reducing in construction, energy and textiles.
Interestingly the fund has increased its exposure to technology sector in May this year. The sector now accounts for nearly 10 per cent of its assets.
Apart from Phoenix International, the fund's other top holdings are Reliance Industries (4.66 per cent), Grasim Industries (4.62 per cent) , Centurion Bank of Punjab (4.28 per cent) and AIA Engineering (3.62 per cent).
This article was originally published on July 27, 2007.
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