It’s never too early in the year to invest in tax-saving instruments. With less than five months to the end of the fiscal, it’s time to get started. Among the several choices available under Section 80C, tax saving equity funds, also known as equity-linked savings schemes (ELSS), are a good avenue for those with a long-term horizon and a stomach for risk.

ELSS is the only pure equity offering amidst the plethora of debt options under Section 80C. Besides the tax break, many ELSS funds have delivered healthy double-digit returns over the long term. Every investment in ELSS, though, is subject to a three-year lock-in.

So, lump-sum deployments rather than systematic investment plan (SIP) instalments may be easier to keep track of. DSPBR Tax Saver is a fine choice among ELSS funds. It has done far better than its benchmark Nifty 500, the out performance being as high as 8-10 percentage points over one to five years. The fund has a strong winning consistency with its one-year daily rolling returns better than the benchmark’s over the past three years.

DSPBR Tax Saver is also a top-quartile performer among peers with an annualised return of more than 25 per cent over three years and close to 20 per cent over five years. This is despite a relatively small corpus (about ₹1,400 crore) and high portfolio turnover with the fund’s expense ratio being higher than some large peers such as Axis Long Term Equity and Reliance Tax Saver.

The fund is almost fully invested in equities with 95 per cent or more of the portfolio in stocks and the balance in cash and related instruments.

A multi-cap stock selection with adroit picks has worked in its favour.

While over 70 per cent of the portfolio — is in relatively stable large-caps, mid-caps and small-cap stocks which account for up to a quarter of the corpus bolster returns during bull runs.

For instance, while large-caps such as HDFC Bank and Asian Paints have delivered healthy double-digit annualised returns, stocks such as Atul and Kajaria Ceramics have been multi-baggers over three and five years. A largely high-growth investing strategy means the stocks in DSPBR Tax Saver’s portfolio may not come cheap.

That said, the fund also invests in value picks and turnaround candidates. For instance, over the past year, it has significantly upped its stake in SBI, its largest holding currently. Besides, a large portfolio with 50 to 60 stocks mitigates risk.

Over the last year, the fund has reduced its holdings in software companies and some private banks while increasing stake in public sector banks.

The rate-sensitive banking and auto sectors are among the top three allocations in the portfolio. This should help with rates likely to fall further and economic growth expected to continue.

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