The Hindu Business Line : Sundaram BNP Paribas Tax Saver: Invest

Investment can be considered in the Sundaram BNP Paribas Tax Saver based on its long- term record. Since inception, the fund has generated a healthy return of 25 per cent on a compounded annualised basis and outpaced its benchmark BSE-200 by 8 percentage points.

Over a five-year time frame, it has generated 44 per cent and trailed its peers such as HDFC Tax Saver and Magnum Tax Gain. Taking advantage of the lock-in period tax-saving funds tend to take long-term view of the market, with several of them investing in mid- and small- cap stocks. Over the past year large-cap stocks have outperformed the mid- and small-cap stocks by a huge margin. Several tax-saving funds also moved from mid-cap stocks (market capitalisation less than Rs 5,000 crore) to large-caps, which helped them to improve performance. Sundaram Tax Saver, too, has taken this course. The fund's exposure to mid-cap stocks around this time last year was close to 60 per cent; this was gradually reduced to about 30 per cent. This period also saw a new fund manager. However, there have been no material changes in sector exposures. Investors who want to take exposures to this fund can route their investments through the SIP route. Since inception, returns from SIP investments have outpaced the lump-sum investment by 12 percentage points.

Performance: Sundaram Tax Saver's performance has seen a slowdown over the past year, trailing the benchmark BSE-200 as well as peers such as Principal Tax Savings (which has similar exposure to mid- and small-cap stocks). However, returns through the SIP route continue to be quite healthy, at close to 100 per cent for the past two years. The stellar performance helped the fund's assets grow threefold, from Rs 61 crore to Rs 190 crore, the past year. With an increase in asset size, the fund has enhanced its cash position.

Portfolio Overview: Sundaram Tax Saver has a well-diversified portfolio with 82 stocks. IT stocks appear to be the preferred sector choice, along with capital goods, remaining among the top sectors in the past six months. Stock-specific exposures are pegged at or below 4 per cent of the portfolio and the top ten stocks together cornered 25 per cent of the assets. It appears from the past year's portfolio, that the fund prefers to adopt a buy-and-hold strategy.

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