Though it tarnished its image during the tech collapse of 2000 and was among the bottom performers for three successive years, it worked hard to regain its composure. Its stellar performance in 2003 was nothing short of a re-birth, and since then the fund has never looked back. It has been ranked No. 1 for three consecutive years from 2004-2006. Along the way, Magnum Taxgain has matured in its fund management. Though historically it has a reputation of losing more than the category average in bearish markets, of late it has displayed an ability to efficiently manage market crashes.
In the quarter of June 2006, the fund lost just 11 per cent compared with the category's loss of 15.35 per cent. And, in the quarter of March 2007, it lost only 4.06 per cent compared to the 6.45 per cent drop in the category.
Since January this year, the fund has consciously reduced its exposure to the construction sector, which has come down to 7.62 per cent (September 2007) from an earlier high of 16 per cent (December 2006). The concentration of technology holdings has also reduced.
There have been other developments too that have reduced the amount of risk assumed by the fund. Small caps, till about a year back, accounted for a quarter of the fund's allocation. This has now reduced to just 6 per cent and given way to large caps.
Owing to its superb performance record and the more recently acquired abilities to protect the downside, we recommend the fund as a core holding in your tax planning portfolio.
This article was originally published on December 12, 2007.
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