Launched on the 26th of December, 2008, IDFC Tax Advantage Fund is an open-ended Equity Linked Savings Scheme (ELSS) that aims at building a diversified portfolio comprising of stocks of companies that boast of strong fundamentals and are available at reasonable valuations. Further, it seeks to generate long-term capital growth by investing in Equity and Equity related securities & upto 20 per cent in debt & money market instruments. Regarded as a good ELSS funds, this mutual fund investment is a multi-cap fund and ranked amongst the best performing mutual funds in India. To further highlight the importance of this fund, this tax saving mutual fund has been ranked number one in the ‘ELSS category’ by CRISIL, for the quarter ended December 2017, a rank which has remained unchanged from the previous quarter.Investors looking for tax-free dividends can choose to invest in the dividend option of the scheme.
By including an ELSS in your portfolio, you stand a chance to save taxes as this mutual fund investment qualifies for tax-exemption under Section 80C of the Income Tax Act, 1961. However, this stipulation is valid only if you adhere to a lock-in period of three years. Consequently, this tax saver mutual fund has been considered to be one of the biggest wealth creators among ELSS funds as it can help create substantial wealth for investors especially if they manage to stay invested keeping in mind a long investment horizon. Therein, Investors need to understand that their principal will be at a moderately high risk. If you’re looking to make a one-time investment in this fund, the minimum investment required is Rs. 500. Similarly, if you’re planning to go down the SIP Investment route, the minimum SIP is Rs. 500 per month as well.
Currently managed by veteran investment honcho, Daylynn Pinto since the 20th of October,2016, this tax saving mutual fund is benchmarked against the BSE 200 index. It also holds the distinction of having outperformed its benchmark by a convincing margin over the past 5 years. Although this fund is predominantly large-cap focused and has a good track record across market cycles, it does take quite a bit of exposure to mid-cap stocks and small-sized companies as well. The fund has a compact portfolio of about 35 stocks. Owing to its multi-cap allocation, nearly 52 per cent is allocated to the stocks of large size companies, 31 per cent to stocks of mid-size companies and 15 per cent to those of small companies. The presence of mid-size stocks in the portfolio makes sense as it can give kicker returns as they turn into large stocks but this happens not so frequently. Additionally, the management team of this fund often takes debt and cash calls depending on the market conditions.This fund also manages to keep its volatility at low levels since it takes higher cash calls, up to 10 per cent of its portfolio, during uncertain markets or when markets turn expensive.
Remarkably, this fund even managed to stay on the right side of the benchmark during the tumultuous year of 2011. If you’re looking to invest in one of the top performing mutual funds in India which has consistently outperformed the ELSS category in terms of returns, do get in touch with our financial advisors for customized investment plans.