The Hindu Business Line : Tata Tax Saving Fund: Book profits partially

INVESTORS can consider booking profits on part of their holdings in Tata Tax Saving Fund, to capitalise on its impressive performance over the past one year. With returns of around 114 per cent over the past year, the fund's performance compares favourably both to diversified equity funds and to the set of tax planning equity funds.

The fund's five-year track record is reasonable, but not as consistent as that of Franklin India Bluechip, HDFC Equity Fund or the HDFC Top 200 fund. Second, the fund partly owes its recent performance to focussed investments in mid-cap stocks, especially in the pharma sector. Given the spike in their valuation levels, such stocks may call for an active approach to profit-booking. It may thus be advisable for investors to lock into part of the gains from the fund through partial profit-booking in the fund.

Suitability: The inclusion of several small/mid-cap stocks in its portfolio and the fairly sharp swings in the fund's NAV over the past five years, suggest that the Tata Tax Saving Fund carries a higher risk profile than diversified equity funds sticking to frontline stocks. It is not the fund for a conservative investor, who holds only one or two equity products in his portfolio.

Such investors should consider liquidating their holdings in the fund in full.

Performance: The fund has comfortably outpaced the S&P CNX Nifty over the past five years and over the past year as well. But the fund's track record in a bull market has been superior to that in a bear market. For instance, in each of the years when the Nifty recorded gains, the Tata Tax Saving Fund did much better than the Nifty.

The fund did particularly well in the bull markets of 1999 and in 2003. But during the market reversal in 2000, the fund lost 55 per cent in value, against the 14 per cent loss in the Nifty's value.

Article E-Mail :: Comment :: Syndication

Stories in this Section
Yahoo! offers online money transfer

Platinum: The new style statement

ICICI's Tax Saving Bond: Subscribe

AirTel expense tracker service

Region-specific slabs in roaming rates

To deliver returns.... Stocks need higher economic growth

Large-caps, greater expectations

Asset management companies — No sign of any fee reduction

Software acquisitions — Discretion to dictate deals

The stock-splitting issue

Tata Tax Saving Fund: Book profits partially