Aditya Birla Sun Life Tax relief 96 finds itself in a spot of bother. Since the start of this year, the fund trails its peers by a wide margin. On a standalone basis, its year-to-date return of more than 17 per cent may not look bad, but in a runaway market where an average peer has delivered over 38 per cent return, investors have reasons to feel disappointed. What has led the fund into this situation? Would it be able to bounce back from the bottom rank it finds itself at this time of the year? We look for some answers from the fund manager Ajay Garg. What has caused the fund to underperform by such a wide margin this year despite a strong rally in mid and small-cap stocks? These are the market segments where the fund traditionally invests more than its peers, and yet it hasn't been able to capitalise? Let me first provide a deeper perspective, going back more than a decade, on how the thought process on managing this fund has evolved. Soon after I took over the fund in 2006, Indian markets had two big crashes in 2008 and 2010-11. We did relatively better than the markets but when I spoke to some investors I figured out that they weren't impressed. We realised that investors were not much concerned about relative performance vis-à-vis the index but were seeking greater consistency. This is a tax-saving fund where the alternatives are avenues like PPF. And therefore, those are the instruments which anchor investor expectations. The learning for us was that consistency and reliability matter more to investors of ELSS than relative performance, and our immediate response was to shift from the 'top-down' approach to a more 'bottom-up' approach of investment management. The idea was to move away from the influence of independent variables to the extent possibl
This article was originally published on October 20, 2021.
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