There is no dearth of good tax-saving funds. But this new kid on the block looks promising. It is rare for a fund to hit a home run two years in succession.
In 2010, when the Sensex delivered 17.43 per cent, this fund delivered 30 per cent (category average: 19%). In 2011, when the Sensex crashed by around 25 per cent, this fund restricted its fall to -15 per cent (category average: -24%). To bag the numero uno slot back-to-back in a good year and bad year is no mean feat.
Sector calls and smart stock bets are the recipe to this fund’s success. Timing also played a crucial role. Soon after its launch, the market tanked. Instead of being a bad omen, it worked to the fund’s advantage. With an exposure of just 25 per cent to equity, it helped stem the fall. That quarter (March 2010), it was the best performer in its category.
In 2010, the fund remained underweight in Oil & Gas and Power. Allocation to Energy averaged around 9 per cent (category average: 14%). BSE Oil & Gas and BSE Power were among the worst performing indices that year. After booking profits in Jindal Steel & Power and Tata Steel, it exited Metals by July 2010. The high allocation to Financial Services aided the returns.
In 2011, FMCG and Pharma stemmed the fall. Stocks like Bata India, ITC and Sun Pharmaceuticals all delivered positive returns last year. The low exposure to Oil & Gas and Power helped. The fund manager also gradually lowered the large-cap allocation during the year.
The fund manager does not refrain from holding cash when he is looking for a good story at a reasonable valuation. He follows a strategy of keeping the core intact while churning the rest of its portfolio. HDFC Bank, HDFC, ICICI Bank, Infosys Technologies, L&T and Reliance Industries have featured in the portfolio since launch while around 43 per cent of the stocks invested in till date have appeared for five months or less.
Initially launched as Axis Tax Saver and later re-christened to Axis Long Term Equity, this is one fund to watch out for.
This article was originally published on February 14, 2012.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
