Widely read:
Ashwani Kumar, fund manager, Reliance Tax Saver, says that the fund attempts to maintain a balanced portfolio across market caps & sectors and seeks to invest primarily in companies with superior growth potential.
What is the investment strategy for the fund?
Reliance Tax Saver attempts to maintain a well diversified portfolio investing 40% to 60% in Large Caps (primarily top 100 co's by market cap) and the balance in Mid capitalization companies. The fund focuses on long term Wealth Creation by investing in growth oriented portfolio consisting of high conviction holdings. The portfolio is well positioned to take advantage of the domestic recovery through allocations to good quality domestic companies both cyclical and consumption oriented.
Around 20 to 30% of the portfolio is allocated to MNC's. MNCs business offer unique advantages of global expertise, established brands (Industrial & Consumer),proven track record, technological advantage and sustainable business models.
What is included in the portfolio and what is avoided?
The fund attempts to maintain a balanced portfolio across market caps & sectors and seeks to invest primarily in companies with superior growth potential. The portfolio focuses domestic recovery plays like Capital Goods, Auto & Auto ancillaries, Finance and Consumption. We have avoided the non-durable consumption space in general and FMCG in particular.
Tax planning funds have a different redemption pattern given the three year lock-in compared to the diversified equity schemes. How much does this factor play a role in fund management and investment? Does it have any bearing on cash allocation?
The portfolio is constructed with a medium term to long term perspective. The stable investor profile given the 3 year mandatory lock - in, assists in investing in high conviction ideas which are likely to play out over a period of time. Thus the emphasis is on long term wealth creation and the fund primarily adopts a Buy and Hold strategy.
The fund does not take active cash calls and usually maintain a very low cash allocation. However in extreme circumstance where believe markets can react, we may prefer deferring our buying decision and increase cash allocation temporarily.
What will you attribute the relative consistent performance of your fund in recent years?
The fund focuses on investing in growth oriented business at reasonable valuations with a potential to scale up significantly as the market cycle turns around. The consistent performance can be attributed to the strong focus on domestic recovery themes like Industrials & Consumer discretionary through allocations to good quality companies both cyclical and consumption oriented. Further strategic allocations to the MNCs which offer the unique advantages of global expertise, established brands, technological advantage etc also held the portfolio in good stead over a period of time.
Any tactical miss you regret (not having, or not having enough or holding something) in your portfolio?
The fund has at all times maintained its focus on the core investment mandate without compromising on the risk management philosophy. In hindsight there will always be opportunities which may appear to be relatively better however as long as the fund is able to register consistent top quartile performance and superior risk adjusted returns, the investors will be satisfied.
Please click here to read the analysis of this fund.
This article was originally published on June 09, 2016.
Disclaimer: This content is for information only and should not be considered investment advice or a recommendation.
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