This tax-saving fund has been an average performer. After making some change in its strategy after June quarter, this fund is making good gains. In the long term it has generated decent returns, which have been more than that of the entire category. For this reason, the fund, which had slipped to 3-star rating in April 2005, ended its drought in July 2006, when it was upgraded to four stars.
The fund's concentration is largely on large cap stocks. Small caps, which occupied up to 8 per cent of its portfolio till a year back, is nowhere to be seen now. The fund had consistently reduced its small cap holdings from February this year. After June, the fund completely exited the small caps and got busy accumulating the large cap stocks. Among the sectors, the fund has increased its exposure to basic engineering to 18.5 per cent, which now occupies largest share of its portfolio. Basic engineering is followed by automobiles (13.70 per cent) and technology (11.76 per cent). The fund exited from the textiles sector in July and is reducing exposure to tech sector. Reliance Industries remains the top holding of the fund. Stocks like Larsen & Tubro, Marico, Motor Industries, Nestle, Infosys Technologies, Quantum Info and Maruti Udyog have also been there for quite some time.
The fund has also consciously maintained the top five holdings in its portfolio below 30 per cent from 2005. In October 2006, the top five stocks occupied 28.78 per cent of its portfolio.
Though five year returns of 44.31 per cent make this fund slightly above average, its preference for large cap companies makes it a compelling option for conservative investors, who are risk averse. The fund has displayed its ability to protect the slippages well. Post -May crash, the fund lost 13.65 per cent in June quarter, less than the average category's loss of 15.35 per cent.