The Hindu Business Line : HDFC TaxSaver: Invest

The fund has an impressive track record, with a consistent performance over different market phases, making it a superior choice both as a tax-saving or an investment option, especially given the present volatile market.

The fund has returned 106 per cent over the year ending April 2006, and has done better than peers such as PruICICI Tax Plan and Sundaram Tax Saver.

Investors looking for tax benefits for the current financial year or considering fresh investments can take exposure thorough the systematic investment plan (SIP).

The SIP allows entry at various points and enables averaging of costs.

An investment made through this route over the past three years would have delivered an annualised return of about 85 per cent.

Being an equity-linked savings scheme with a lock-in period of three years, investment in this scheme is eligible for tax benefit under Section 80-C of the Income Tax Act up to a ceiling of Rs 1 lakh.

One-time investors can opt for the dividend payout, while an SIP investor can choose dividend re-investment.

From a tilt towards mid- and small-cap stocks in 2004, HDFC Tax Saver has moved to a strategy of holding more large-caps in its portfolio.

This well-timed shift has helped the fund withstand the market volatility. It, however, continues to hold about 20 per cent in stocks with a less than Rs 2,000-crore market cap, and is well placed to benefit from any renewed action in the mid-cap space.

The portfolio turnover, at 46 per cent over the past two years, indicates that it is less aggressive than such peers as PruICICI Tax Plan.

Portfolio overview: HDFC TaxSaver's asset size has grown from Rs 260 crore to Rs 523 crore between January and April 2006 .The fund has maintained a compact portfolio of less than 40 stocks.

The top ten account for 56 per cent of the assets as of April 2006; 43 per cent of the assets is concentrated in sectors such as capital goods, non-ferrous metals and software.

Fund facts: HDFC TaxSaver was launched in December 1998. Mr Dhawal Mehta manages the fund. The entry load is 2.25 per cent and minimum one-time investment is Rs 500.

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