Rohit Singhania, fund manager, DSP BlackRock Tax Saver Fund, gives his view on the ELSS fund
What is the investment strategy for the fund?
The primary investment objective of the Scheme is to seek to generate medium to long-term capital appreciation from a diversified portfolio that is substantially constituted of equity and equity related securities of corporate, and to enable investors avail of a deduction from total income, as permitted under the Income Tax Act, 1961 from time to time.The fund follows diversified active portfolio management approach and has no bias towards any style or theme. Endeavour is to deliver long term capital appreciation with minimal short term volatility. At times, we are open to take tactical calls to capitalize on market trends and opportunities.
What is included in the portfolio and what is avoided?
The benchmark for the scheme is NIFTY 500 Index. Stocks which fall in our investible universe and offer good upsides based on our research / tactical view are included in the portfolios. As such there are no restrictions on type of stocks which we avoid / cannot buy
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 element of 3 year lock in for new inflows helps construct the portfolio with longer term duration. Typically, weights can be higher in the mid / small / micro cap space where one needs to give more time to business to develop, grow and give returns. However, the endeavour is to manage the fund with a mixed approach and try to keep short term volatility under check. Cash calls taken are no different than that of a diversified open ended scheme. The near term market view along with comfort on valuations and growth expectations determine the cash levels in the portfolio.
Any tactical miss you regret (not having, or not having enough or holding something) in your portfolio.
We were very confident on the OMC story and few mid caps where we estimated strong earnings growth, could have taken higher exposure. But keeping stock specific risk in consideration moderated portfolio weight accordingly.