Mirae Asset Tax Saver Fund (MATSF) is one such ELSS that aims for wealth creation through equities and tax saving benefit with a single portfolio.

Launched not long back ago in December 2015, MATSF manages a corpus of Rs 3,066 crore. The fund is managed by Mr Neelesh Surana (since inception) who has over 24 years of experience in equity research and portfolio management.

 

Graph 1: Growth of Rs 10,000 if invested in Mirae Asset Tax Saver Fund since inception

Graph 2: Mirae Asset Tax Saver Fund's year-on-year performance

Table: Mirae Asset Tax Saver Fund's performance vis-a-vis category peers

Scheme Name	Corpus (Cr.)	1 Year (%)	2 Year (%)	3 Year (%)	5 Year (%)	Std Dev	Sharpe
Mirae Asset Tax Saver Fund	3,066	9.49	10.70	19.33	NA	13.07	0.27
JM Tax Gain Fund	36	7.05	7.37	15.02	14.35	13.91	0.19
Motilal Oswal Long Term Equity Fund	1,648	1.05	4.61	14.89	15.05	14.03	0.17
Axis Long Term Equity Fund	21,473	8.08	11.37	14.77	15.89	12.90	0.24
Tata India Tax Savings Fund	2,094	7.57	7.38	14.04	13.66	14.28	0.18
Taurus Tax Shield Fund	68	2.31	7.61	13.78	12.07	12.42	0.18
Invesco India Tax Plan	988	4.10	8.88	13.75	14.93	12.44	0.19
Canara Rob Equity Tax Saver Fund	1,005	8.16	9.91	13.59	11.84	12.88	0.19
Kotak Tax Saver Fund	1,068	8.49	6.66	13.51	14.54	12.71	0.17
LIC MF Tax Plan	263	6.13	8.66	13.44	12.29	12.52	0.20
DSP Tax Saver Fund	6,260	7.65	6.23	13.19	14.44	13.57	0.15
IDFC Tax Advt(ELSS) Fund	2,119	-2.13	4.46	13.10	13.66	15.13	0.13
Aditya Birla SL Tax Relief '96	10,029	0.16	6.37	12.62	14.96	12.93	0.14
PGIM India LT Equity Fund	356	4.63	6.40	12.58	NA	12.05	0.16
Principal Tax Savings Fund	408	-1.79	3.06	12.44	12.19	15.01	0.10
BOI AXA Tax Advantage Fund	266	-1.95	4.41	12.22	11.87	16.56	0.16
Essel Long Term Advantage Fund	59	5.62	5.52	12.03	NA	12.98	0.13
L&T Tax Advt Fund	3,382	-2.84	2.66	11.51	12.23	13.12	0.11
ICICI Pru LT Equity Fund (Tax Saving)	6,707	5.01	7.54	11.39	11.99	12.43	0.12
Quant Tax Plan	10	1.83	3.99	11.29	15.98	14.19	0.09
NIFTY 200 - TRI		5.12	7.73	12.96	10.92	12.46	0.17

Returns are on a rolling basis and in %, calculated using Direct Plan - Growth option. Those depicted over 1-Yr are compounded annualised.
Data as on January 22, 2020
(Source: ACE MF) *Please note, this table only represents the best performing funds based solely on past returns and is NOT a recommendation. Mutual Fund investments are subject to market risks. Read all scheme related documents carefully. Past performance is not an indicator for future returns. The percentage returns shown are only for indicative purposes.

MATSF outpaced the benchmark and category average across rolling period, generating a lead of around 3-6 percentage points.

The fund stood among the category toppers across rolling period. JM Tax Gain Fund, Motilal Oswal Long Term Equity Fund and Axis Long Term Equity Fund were the other top performers during the period.

In terms of risk-return profile, the fund's volatility has been slightly higher than the category average but nearly in line with the benchmark. Regardless, it managed to reward investors with superior risk-adjusted returns as denoted by its Sharpe ratio.

Investment strategy of Mirae Asset Tax Saver Fund

Categorised as ELSS, MATSF is mandated to invest minimum 80% of its assets in equity and equity-related instruments. The fund has the flexibility to invest across market capitalisation, styles and themes.

MATSF focuses on building a diversified portfolio of strong growth companies having a robust business models, enjoying sustainable competitive advantages as compared to their competitors and having high return ratios across market capitalisation and sectors.

The fund manager invests in companies that are likely to benefit from macroeconomic, industry and sectoral trends (Top down Theme Overlay) after doing bottom up analysis and due diligence, determining quality of management in terms of corporate governance and commitment to minority shareholders etc.

The fund manager aims to have a large base of stocks in the portfolio to avoid concentration risk and liquidity risk.

 

Graph 3: Portfolio allocation and market capitalisation trend in Mirae Asset Tax Saver Fund

Graph 4: Top portfolio holdings in Mirae Asset Tax Saver Fund

Holding (in %) as on December 31, 2019
(Source: ACE MF)  

As on December 31, 2019, MATSF held 55 stocks in its portfolio across various sectors. The top 10 stocks constitute 45.7% of its portfolio. HDFC Bank has the highest stock allocation of 8.9%, followed by ICICI Bank 6.3%, SBI 4.8%, Reliance Industries 4.6% and L&T 4.2%. Rest of the stocks in top 10 holding have allocation in the range of 3-4%. Notably, 5 stocks in its top 10 holding belong to the Banking sector.

In terms of sector, the fund has the highest exposure to financial services which includes Banks 27.7% and Finance 8%. Consumption 11.8%, Infotech 8.2% and Petroleum Products 6.7% follow closely behind. Engineering, Pharma, Textiles, Auto, among others are the other prominent sectors in the portfolio.

Top contributors

In the last one year the fund gained significantly from its holdings in ICICI Bank, Reliance Industries, HDFC Bank, Info Edge (India), Tata Global Beverages and Axis Bank which together contributed weighted return of around 9%. The fund also gained from its holdings in Kotak Mahindra Bank, Dr Lal Pathlabs, TCS, SBI, Titan Company, Divis Laboratories, among others.

On the other hand stocks like Khadim India, Ceat, ITC, Jyothy Labs, L&T, etc. eroded some of its gains.

Suitability Mirae Asset Tax Saver Fund

MATSF has benefited by investing in high growth-oriented stocks but at right valuations, rewarding investors with superior returns over benchmark and category peers. The fund maintains a diversified portfolio of quality stocks with a long term view. However, the concentrated allocation to Banking sector may lead to high volatility, if the sector comes under pressure for any reason. As ELSS come with a lock-in period, investors do not have an exit option in case the scheme underperforms during that period. Such funds are suitable only for aggressive investors having moderately high risk appetite, along with an investment horizon of 5 years or more.

Note:  This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.

Editor's note:  The last few years have not been among the best for equity mutual funds. While most funds have underperformed or are struggling to match the returns of the benchmark, there are few funds that have the potential to constantly generate alpha for its investors. And we have identified five such high alpha generating funds, in our latest report 'The Alpha Funds Report 2020'. Do not miss our latest research finding. Get your access to this exclusive report, right here!

 

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