Starting from a concentrated tech portfolio, the fund has sought to attain diversity in recent times. With compelling performance in wildly varying market, it is well poised to deliver long-term returns with tax efficiency.
20-Mar-2002 •Research Desk
Pioneer ITI Tax-Shield, an open-ended tax saving scheme seeks long-term capital growth. The investment in the fund calls for minimum participation period of 3 years to claim a deduction u/s 88 of the Income Tax Act.
Launched in April 1999, the fund has put up compelling numbers. A total return of 38 percent through March 14, 2002, is much more than its peers' launched during the period. The return looks more impressive as it has been achieved in wildly varying market. In vaporous 2000 the fund gained marginally and lost 13 percent in 2001, the smallest decline among equity tax savers. The fund owes its success to the massive initial gains from a tech heavy portfolio and more recently from a more diverse portfolio, which still shows its tech tilt.
The fund's launch preceded the peak of technology lead market summer. And on a tiny asset base to start with, the fund fully capitalised the boom. In its first year itself, it gained over 200 percent and gave a 140 percent payout in its dividend plan. This handsome gain in its first year turned a big crowd puller in 2000 tax season and investors poured money to push its unit capital by 10 times. But with tech wreck, the fund lost nearly 58 per cent by September 2001 from its peak value.
During this period of sustained fall and technology getting out-of- favour, the portfolio attained diversity with reduced emphasis on technology. Saddled with stable assets, as investment in the fund comes with a three-year lock-in period, helped the fund take a relatively longer view. Though technology remains mainstay, but almost 80 percent of the portfolio is elsewhere, spread across large-cap growth stocks mainly the banking, consumer, healthcare and PSU stocks. In 2001, this strategy has cushioned the fall and proved the right growth gearing in the last quarter of 2001.
The fund looks well poised to deliver long-term capital growth.