What investment strategy goes into managing HDFC Taxsaver?
HDFC Taxsaver targets to achieve capital appreciation by investing predominantly in stocks with high potential for alpha. A reasonable exposure is also maintained to large-cap stocks to impart portfolio stability. The fund applies an investment approach based on a set of well-established but flexible principles that emphasise the concept of sustainable economic earnings and cash return on investment. The objective is to identify businesses with superior growth prospects at a reasonable price. The fund invests in a minimum of six sectors, which are not highly correlated; the objective is to maintain reasonable diversification.
Does the 3-year lock-in play a role in building the portfolio in the Tax Saver?
The 3-year lock-in period allows for relatively higher flexibility of investing in mid-cap companies operating in emerging businesses or sectors with long-term gestation period. As of now, this fund has 35 per cent allocation to mid-cap stocks, with the balance in large-cap stocks. However, at all times, the objective is to invest in companies which meet the investment criteria for this fund.
How differently do you manage HDFC Taxsaver compared to HDFC Core & Satellite fund?
Both the funds are very different. HDFC Core & Satellite aims to generate capital appreciation over the medium- to long-term by investing in equities and equity-linked instruments. The portfolio comprises two components – the Core group and the Satellite group. The Core group has companies that are well-established and fall under the large-cap category. They essentially have a long track record as well as a leading competitive position in their industry and form 60-80 per cent of the portfolio, made up of 10-20 stocks.
The Satellite component forms 20-40 per cent of the portfolio in companies having higher earnings growth potential and also higher risk. These would have the potential to offer higher returns while carrying higher risk and comprise 10-20 stocks. The higher returns potential would be on account of the company's presence in an emerging area or having a new business model; a new technology or research driven company without much commercial success so far; a turnaround case or/and an ignored company facing a temporary setback due to which the stock price is depressed. Or a stock that is expected to benefit from environmental changes.
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.
