DSP TAX SAVER
ICICI PRU LONG TERM EQUITY
AXIS LONG TERM EQUITY
SBI MAGNUM TAX GAIN
HDFC TAX SAVER
RELIANCE TAX SAVER
FRANKLIN INDIA TAX SHIELD
L&T TAX ADVANTAGE
The ELSS category is very competitive. It comprises a motley mix of funds with strong and established strategies. Funds that fall under this category are diversified equity funds with no restriction on the market cap. So they could be multi cap or large cap or mid cap oriented.
Equity Linked Savings Schemes, or ELSS, fall under Section 80C of the Income Tax Act. Investments made here are eligible for a deduction up to Rs 1,50,000.
DSP Tax Saver
Date of Analysis: March 2019
Analyst Rating: Neutral
Fund Manager: Rohit Singhania
The fund’s gestation period will be longer in a more competitive category with strong and established strategies.
There have been significant changes within the investment team as well as at the fund-house level. In May 2018, BlackRock and DSP parted ways from their decade-old joint venture. The equity investment team also witnessed significant turnover, with some of its key managers– S. Naganath (CIO), Anup Maheshwari (CIO of equities after Naganath), and Harish Zaveri– exiting the fund company between 2017 and 2018, which is a cause for concern.
The fund’s strategy, however, has stayed consistent under Singhania. He runs it in line with its investment mandate, which allows him to adopt a fluid investment approach without any bias or restrictions in terms of stocks or sectors. In the manager’s own words, this fund doesn’t have a defined investment approach, which in turn provides him the liberty to capitalise on any investment opportunity that he sees in the market, provided it makes a grade on his selection parameters.
Consequently, the fund’s portfolio turnover tends to be on the higher side.
While an unconstrained process can be very rewarding, it is risky, too. A wrong bet can lead to significant under performance. Also, the absence of a rigidly defined method means investments are made on a somewhat intuitive basis. Hence, it must be noted that the success of the investment process largely depends on Singhania’s execution skills.
We believe that the fund is yet to make a cut for itself within the category and needs more time before it could qualify for an upgrade.
ICICI Prudential Long Term Equity
Date of Analysis: November 2018
Analyst Rating: Neutral
Fund Manager: Sankaran Naren, Harish Bihani
There has been another change in manager in this fund. After taking over its mantle in October 2015, George Herber Joseph has relinquished the fund’s management responsibility effective November 5, 2018.
This fund has passed through multiple hands in the past few years. CIO Sankaran Naren (October 2005 till February 2011), Munzal Shah (March 2011 till May 2011), and Chintan Haria (June 2011 till September 2015) have managed this fund earlier. George Herber Joseph started comanaging this fund along with Haria from April 2015 and took over as the lead manager in October 2015. He comes from ICICI’s portfolio-management-services division.
The following report was based on our opinion on Joseph and his investment style.
Pleasingly, and despite the changes, the investment strategy largely stays the same.
However, within the defined framework, Joseph has realigned the portfolio since taking over the fund in line with his investment thesis and understanding of macroeconomic scenarios. Joseph plies a free-flowing multi-cap strategy and follows a benchmark-agnostic approach for constructing the portfolio. He is fairly valuation-conscious and stays away from expensive stocks/sectors. He scouts for companies having good management with strong long-term track records, good free cash flow generating capabilities, and strong balance sheets. While investing, Joseph prefers staying away from investing in highly leveraged stocks.
Admittedly, the fund hasn’t done badly despite the changes at the helm, with the year 2017 being an exception. This year, the fund underperformed substantially as the manager’s valuation-conscious investment approach and strategy of taking contra bets has been out of favour, which dragged its overall performance under Joseph’s stewardship down with regard to benchmark index and category peers. However, these are still early days for Joseph at the helm here. We would like to evaluate his ability in executing the process over a market cycle to build conviction.