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Fund Focus: Magnum Taxgain

The fund's strategy of increasing exposure to large caps while reducing small caps is paying rich dividends

Push for Stability
Despite a miserable start, the fund has done well. Though relegated from a five to a four star in October, this fund has been able to beat the category for the past three years consistently. In the three-year period ended November 16, 2006, its 75.12 per cent annualised return has been well above the 44.56 per cent gain of the category and a lot more than 35.37 per cent of the benchmark S&P CNX Nifty.

Its year-to-date returns (till November 16) of 37.56 per cent have also been much more than the average peers' 26 per cent and slightly more than the benchmark's 36.67 per cent.

If we talk of quarterly returns, for the September quarter again the returns were good at 16.38 per cent, more than the category's average of 14.95 per cent. Apart from generating good returns, the fund is learning to manage the market crashes. In the June quarter, the fund lost just 11 per cent as compared with the category's loss of 15.35 per cent though historically it had lost more than category averages in the bearish markets. Since January this year, the fund had been mopping up large-cap stocks slowly.

Small caps, which used to consume over half of its assets about a year and half ago, now account for just 10 per cent of its assets. The fund has, however, not altered much with the allocation to mid-cap stocks.

The fund has seen several manager changes since November last year but there had been no effect on high returns generated by it. Technology sector has the fund's highest allocation and it may not come as a surprise that Infosys is its top holding. It has held on to stocks like Thermax, Gujarat Ambuja, KPIT Cummins, Kotak Mahindra Bank, Praj Industries for the past three years.