HDFC TaxSaver is an open-ended equity linked savings scheme (ELSS), offered by HDFC Mutual Fund, with an objective of wealth creation in the long term. Like all ELSS funds, it has a lock-in period of three years. Launched in 1996 is one of the oldest fund in the ELSS category and has generated whopping 26.94% CAGR returns since its inception for its investors.
However, HDFC TaxSaver has trailed other peers when looking at its overall performance compared to other ELSS funds. Its passive fund management strategy helped in controlling its downside market risk. At times, HDFC TaxSaver has failed in taking advantage of opportunities available in the market at different times. Though the fund has outperformed its benchmark index Nifty 500 across several time frames it has failed to stay upbeat and compete with its peers in the ELSS category.
The Average Assets Under Management (AAUM) of HDFC TaxSaver has been steadily on the rise since March 2016. This is an outcome of the market rally witnessed since February 2016 and steady inflows from retail investors who have been flocking to equity investments over the past few years. As a result of this, HDFC TaxSaver has enjoyed a steady growth in assets.
PersonalFN takes a detailed look at the features and performance of HDFC TaxSaver Fund
Investment Objective of HDFC TaxSaver
The investment objective of HDFC Tax Saver is “to achieve long term growth of capital.” Though every endeavour will be made to achieve the objective of the HDFC TaxSaver, the AMC / Sponsors / Trustee do not guarantee that the investment objective of the scheme will be achieved. No guaranteed returns are being offered under the HDFC TaxSaver.
HDFC TaxSaver Fund Details
Fund Facts
| Category |
ELSS |
Style |
Blend |
| Type |
Open ended |
Market Cap Bias |
Multi-cap |
| Launch Date |
31-Mar-96 |
SI Return (CAGR) |
26.94% |
| Corpus (Cr) |
Rs 7,397 |
Min./Add. Inv. |
Rs 500 / Rs 500 |
| Expense Ratio (Dir/Reg) |
1.47% / 2.28% |
Exit Load |
0% |
Data as on December 31, 2017
(Source: ACE MF)
Under normal circumstances, the HDFC TaxSaver will allocate upto 80% of its assets in equity and upto 20% in debt and money market instruments.
HDFC TaxSaver 5-year Performance
Growth Of Rs 10,0000 If Invested In HDFC Taxsaver
5 Year Ago
Data as on December 31, 2017.
(Source: ACE MF)
Had you invested Rs 10,000 in HDFC TaxSaver five years ago in January 2013, it would have more than doubled to Rs 22,434. This translates in to a compounded annualised growth rate of 17.54%. In comparison, a similar investment in the benchmark Nifty 500 would have resulted in a compounded return of 14.83%. Thus the investment of Rs 10,000 would now be worth Rs 19,963.
The performance over the past five years has hugged the benchmark for most of the period. Bulk of the outperformance came in the period post February 2016.
HDFC TaxSaver: 3-year Rolling Performance
3-Year Compounded Annualised Return
At End Of Each Year
Data as on December 31, 2017
(Source: ACE MF)
If we break up the decade long performance in to three year period, it can be seen that HDFC TaxSaver has been successful in beating the benchmark on most occasions. Among the best periods of the fund was over the 3-year period ended December 2011, where it outperformed the benchmark by nearly 10 percentage points in compounded returns.
HDFC TaxSaver Performance Vis-à-vis Category Peers
Rolling Period Returns
Returns are on a rolling basis and those depicted over 1-Yr are compounded annualised.
Data as on January 15, 2018
(Source: ACE MF)
The performance of HDFC TaxSaver over the past 1-year and 2-year rolling periods has been decent. The fund did better than the benchmark and most other peers. In the longer term periods of 3-years and 5-years, though the scheme has outscored the benchmark, the returns have trailed several other peers in the category.
HDFC TaxSaver Investment Strategy
The funds collected under HDFC TaxSaver shall be invested in equities, cumulative convertible preference shares and fully convertible debentures and bonds of companies. It shall be ensured that funds of HDFC TaxSaver shall remain invested to the extent of atleast 80% in securities specified above.
The ELSS guidelines, as applicable, would be adhered to in the management of HDFC TaxSaver. If the investment in equities and related instruments falls below 80% of the portfolio at any point in time, it would be endeavoured to review and rebalance the composition. The scheme will retain the flexibility to invest in the entire range of debt instruments and money market instruments.
In order to provide long-term capital appreciation, the scheme will invest mainly in growth companies. The companies selected under this portfolio would generally consist of medium to large sized companies which:
– Are likely to achieve above average growth than the industry
– Enjoy distinct competitive advantages; and
– Have superior financial strengths
The aim will be to create a portfolio, which represents a cross-section of strong growth companies in the prevailing market. In order to reduce the risk, the portfolio will target reasonable diversification.
HDFC TaxSaver Portfolio Allocation
Market Capitalisation Trends
Holdings (in %) as on December 31, 2017
(Source: ACEMF)
HDFC TaxSaver is heavily weighted to large-caps as seen the market-cap allocation chart. However, does maintain an opportunistic allocation to mid-caps as well. Over the past 12 months, the large-cap exposure has stayed around 70%, before gradually increasing to nearly 80% of the portfolio. As on December 31, 2017 the large-cap allocation stands at 76%. In the past year, the allocation to mid-caps has ranged between 16%-23% of the portfolio. The mid-cap weightage of HDFC TaxSaver is currently 19% of the portfolio. The cash levels have fluctuated wildly over the year. It has moved from a low of 3% to a high of 11%. The cash exposure is at present 4.75% of the portfolio.
HDFC TaxSaver Top 10 Holdings
| Stocks |
% of Assets |
| State Bank Of India |
7.48 |
| HDFC Bank Ltd. |
6.74 |
| ICICI Bank Ltd. |
6.33 |
| NTPC Ltd. |
5.55 |
| GAIL (India) Ltd. |
5.26 |
| Larsen & Toubro Ltd. |
5.02 |
| Reliance Industries Ltd. |
4.96 |
| Tata Steel Ltd. |
3.56 |
| Infosys Ltd. |
3.37 |
| Bharat Electronics Ltd. |
3.19 |
Holdings (in %) as on December 31, 2017
(Source: ACEMF)
As on December 31, 2017, HDFC TaxSaver held a portfolio of 50 stocks. The allocation is skewed to the top holdings. The top 10 stocks accounted for over half the assets of the portfolio. Three banks—SBI, HDFC Bank and ICICI Bank alone account for one-fifth of the portfolio.
HDFC TaxSaver Top Sectors
Holdings (in %) as on December 31, 2017
(Source: ACEMF)
Banks lead the list of sectors with a total allocation of 26%. Stocks related to the energy sector and industrial capital good sector follow behind with an exposure of around 10%. Petroleum products and software stocks command an allocation of about 7% each. In all, the top 5 sectors make up for 60% of the total assets.
Suitability of HDFC TaxSaver
When you invest in ELSS or a tax saving mutual fund, the amount invested is eligible for tax exemption under section 80C, but only up to Rs 1.5 lakhs will be eligible for tax exemptions (as per the current tax laws). Moreover, these mutual funds come with a lock in period of 3 years, which means your investment in these funds cannot be withdrawn before completion of 3 years from the date of your investment.
ELSS funds are an ideal investment avenue for high risk investors to park their long term fund and earn a tax rebate as well. Being equity oriented, only investors with a high-risk appetite should consider investing in such funds. In terms of investment style, ELSS may be of any genre. They may follow growth or value style or even a combination of both. Moreover, they may restrict themselves to a particular market-cap or may invest without any market-cap bias.
If you are not sure about how to align these schemes with your tax planning or financial goals, do consult your investment consultant/advisor.
As an investor, you need to pick the right and suitable ELSS funds to meet your financial goals.
Hence, a process that combines both quantitative and qualitative factors has a good chance of picking funds that can deliver decent market-beating returns. The quantitative factors will cover the fund’s performance across multiple periods and market cycles, as well as the fund’s ability to manage risk among other factors.
The qualitative factors will take into account the fund manager’s experience, the performance of the fund house across multiple schemes, as well as the quality of assets in the portfolio, to name a few. Thus, when analysing a fund across both quantitative and qualitative parameters, you will be able to pick a fund that has a promising future.
PersonalFN adopts such a process to shortlist the potentially best mutual funds for its subscribers.
If you are looking for the top ELSS funds to invest in 2018, subscribe to
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In this report, you will find the Top 3 ELSS that are geared to grow your investment multi-fold over long term while saving your taxes. These Top 3 ELSS are handpicked through our special 7-point Selection Matrix methodology, and are considered to be potentially the best tax-saving mutual funds in the Indian market.
DISCLOSURE AS PER SECURITIES AND EXCHANGE BOARD OF INDIA (RESEARCH ANALYSTS) REGULATIONS, 2014
About the Company including business activity
Quantum Information Services Private Limited (QIS) was incorporated on December 19, 1989.
QIS was promoted by Mr. Ajit Dayal with an objective of providing value-based information / views on news related to equity markets, the economy in general, sector analysis, budget review and various personal products and investments options available to the Public. It was the first company to start equity research on an institutional level.
'PersonalFN' is a service brand of QIS and was started in the year 1999. In 1999, the Company registered the Domain name www.personalfn.com for providing information on mutual funds and personal financial planning, financial markets in general, etc and services related to financial planning and research in various financial instruments including mutual funds, insurance and fixed income products to customers. It offers asset allocation and researched investment recommendations through its financial planning services.
Quantum Information Services Private Limited (QIS) is registered as Investment Adviser under SEBI (Investment Adviser) Regulations, 2013 and having Registration No.: INA000000680. In terms of second proviso to Regulation 3 (1) of SEBI (Research Analysts) Regulations, 2014 the Company is not required to obtain Certificate of registration from SEBI.
Disciplinary history
There are no outstanding litigations against the Company, it subsidiaries and its Directors.
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Details of associates
- Money Simplified Services Private Limited;
- PersonalFN Insurance Services India Private Limited;
- Equitymaster Agora Research Private Limited;
- Common Sense Living Private Limited;
- Quantum Advisors Private Limited;
- Quantum Asset Management Company Private Limited;
- HelpYourNGO Private Limited;
- HelpYourNGO Foundation;
- Natural Streets for Performing Arts Foundation;
- Primary Real Estate Advisors Private Limited;
- Rahul Goel;
- I V Subramaniam.
Disclosure with regard to ownership and material conflicts of interest
- Neither QIS, it’s Associates, Research Analyst or his/her relative have any financial interest in the subject Company , except QIS receives fees for providing research to Quantum Equity Fund of Fund (QEFoF) which is Fund of Fund scheme managed by QMF.
- Neither QIS, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one per cent or more securities of the subject Company, at the end of the month immediately preceding the date of publication of the research report.
- Neither QIS, it's Associates, Research Analyst or his/her relative has any other material conflict of interest at the time of publication of the research report except that QIS (PersonalFN) is, as per SEBI (Mutual Funds) Regulations 1996, an associate / group Company of Quantum Asset Management Company Private Limited and Trustees and Sponsor of Quantum Mutual Fund (QMF) and to that extent there may be conflict of interest while recommending any schemes of QMF. However any such recommendation or reference made is based on the standard evaluation and selection process, which applies uniformly for all Mutual Fund Schemes. The payment of commission (upfront /annualized & trail), if any, for any Schemes by QMF to QIS (PersonalFN) is also at arm's length and as per prevailing market practices
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- Neither QIS nor it's Associates have received any compensation or other benefits from the subject Company or third party in connection with the research report
General disclosure
- The Research Analyst has not served as an officer, director or employee of the subject Company.
- QIS or the Research Analyst has not been engaged in market making activity for the subject Company.
Subject Company means Mutual Fund Schemes
Quantum Information Services Private Limited CIN: U65990MH1989PTC054667 Regd. Office: 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021 Corp. Office: 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021. Email: info@personalfn.com Website: www.personalfn.com Tel.: 022 61361200 Fax.: 022 61361222
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Add Comments
| Comments |
Shashinangia1@hotmail.com
Jan 15, 2020
Can HDFC Tax Saver ELSS be purchased by an NRI. Pl. load Form .
SKN |
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