Religare Invesco Tax Plan: Invest

Looking for a route to save tax via an equity-linked savings scheme? Consider investing in Religare Invesco Tax Plan, which has been around for around seven years now. The fund ranks among the top quartile of funds in its category over one-, three- and five-year timelines.

Benchmarked against the BSE 100, the fund has a strong large-cap orientation. It, however, has a fair share of stocks with smaller capitalisations, which hold higher risk.

The fund’s picks in this space, though, are for the most part fundamentally sound companies, such as VA Tech Wabag, Sadbhav Engineering, Greaves Cotton, and Jagran Prakashan.

Investors opting for the SIP route to investing in the fund should note that each instalment will be locked in for a period of three years.

Over one, three, and five year time-frames, the fund has beaten the BSE 100 by a margin of two to five percentage points. In the rollercoaster ride the market has taken in the past five years, the fund performed well across market cycles. The fund’s off-beat picks, and remaining over 90 per cent invested at most times, have helped. In early 2009 the fund was quick to redeploy cash.

In the 2011 downswing, for example, the fund lost five percentage points less than its benchmark. In the year to date, the fund’s return of 7 per cent is a step ahead of the BSE 100’s 5.8 per cent despite higher holding in bank stocks.

On an annual rolling return basis since inception, the fund has beaten its benchmark about 80 per cent of the time. While the fund lags category leaders such as ICICI Pru Tax Plan and Franklin Tax Shield, it has done better than most others such as HDFC Tax Saver or L&T Tax Advantage.

The fund’s latest portfolio has a mid- and small-cap share of around 27 per cent with remaining in large-cap stocks. The portfolio is also usually well-diversified across sectors. Early calls on stocks that returned multi-fold over the years such as Lupin, Maruti Suzuki, and Apollo Hospitals have boosted returns.

The banking sector has been the top holding most of the time over the past seven years. In recent times, the fund’s relatively off-the-track picks such as J&K Bank and ING Vysya Bank have worked well.

The software sector is the other current top holding. The fund has kept holding in defensive sectors such as pharmaceuticals and FMCG steady, while juggling individual stocks within the sector. Timely additions to agro-chemicals such as PI Industries and Bayer CropSci have also paid off.

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