Magnum Taxgain has emerged as the prodigious son of the equity linked saving scheme (ELSS) category. One that, every investor would be extremely proud of owning. It had been ranked number 1 for three consecutive years from 2004-2006 though its ranking slipped in 2007.
And along the way the fund has matured in its fund management. Of late it has shown 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 again in the first quarter of 2007 (January - March) Magnum Taxgain lost only 4.06 per cent compared to the 6.45 drop in the category. Historically the fund has been known to lose more than the category in bearish markets.
There have been some changes in the portfolio from the last time we visited it. Since January 2007, the fund has been consciously reducing its exposure to technology, while increasing exposure to auto and financial services.
Similarly the allocation to the tech sector is also down to 10.16 per cent (as on December 31, 2007) from 18.5 per cent in December 2006. On the other hand, the fund's exposure to auto sector went up from 1.14 per cent in December 2006 to 3.26 per cent in December 2007. The share of financial services has quadrupled from 3 per cent in December 2006 to 12 per cent in December 2007.
There have been other developments that have reduced the amount of risk assumed by the fund. Since 2006, the fund has substituted its small cap and mid cap holdings in favour of large cap stocks. Small caps, till about a year back accounted for 12 per cent of the fund's allocation but now this has reduced to just above 4 per cent.
Our apprehension of frequent manager changes has been put to rest. We would recommend the fund as a core holding in your tax planning portfolio.