Here's one fund that has managed to double its AUM in one year. The Principal Tax Savings fund has consistently beaten the category average as well, making it a core pick for most portfolios
22-Nov-2008 •Research Desk
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 2006 and October 2007 were the only exceptions 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 January 31, 2008) 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 2007, the fund's return of 80 per cent placed it in the league of the category beaters and the fund was ranked third amongst 26 funds. In 2006 also the fund was ranked third among 23 funds. Compare this to its position in 2005 - 13th out of 20 funds.
The fund, which has doubled its AUMs in a year to Rs 350 crore maintains a portfolio of 35-40 stocks. The fund generally invests in mid cap and small companies and its exposure to such companies is generally in the region of 65-70 per cent.
The fund's top holding is Godrej Industries (5.68 per cent). The fund very aggressively increased its exposure to the stock in November 2007. Interestingly the fund does not hold Reliance Industries at all as it exited and the stock in July 2007. The fund's top five holdings constitute almost a quarter of its assets. Since December 2006, the fund has more than trebled its exposure to metal and metal products sector and now is its top sector holding (17 per cent). The BSE Metals Index was up 31.5 per cent in September 2007 quarter and 43.56 per cent in December 2007 quarter.
The fund stands out due to its ability to spot trends early and cash in on it.