Investors with a long-term perspective can buy units of Canara Robeco Equity Tax Saver as the fund has given steady returns across market cycles and it has been among the top performers in the equity-linked savings schemes (ELSS) category. These category schemes help investors reduce up to ₹1.5 lakh from taxable income under Section 80C of the Income Tax Act and have a statutory lock-in of three years.
The fund is benchmarked against S&P BSE 100 TRI and over one-, three- and five-year time periods; it has clocked returns of 32.7 per cent, 17.7 per cent and 19.8 per cent against the benchmark returns of 28.7 per cent, 13.2 per cent and 17.9 per cent respectively. The fund has outpaced the benchmark and had been to the tune of 2-4 percentage points. It is among the top quartile of ELSS category funds across one-, three- and five-year periods. In the past five years, the fund clocked a compounded annual return of 19.9 per cent, outpacing the key peer funds namely Axis Long Term Equity and DSP Tax Saver. Canara Robeco Equity Tax Saver is a need based fund that provides dual benefit of equity investing along with tax saving and is suitable for investors with a moderately high risk appetite.
Portfolio and strategy
Canara Robeco Equity Tax Saver provides a well-diversified portfolio of fundamentally strong companies with growth style of investing. It identifies companies with strong competitive position in good business and having quality management. Moreover, the fund predominantly invests in the large cap stocks and the recent large-cap holding is at 70.8 per cent while the mid-cap allocation is at 22.8 per cent. Small-cap and debt share about 3.8 per cent and 2.5 per cent allocations respectively in the portfolio. The scheme has flexible investment strategy with no sector or theme bias.
In the underperforming year 2018, the fund managed to deliver a positive return of 2.6 per cent while the category average returns slumped 6.3 per cent. Sustaining the momentum, the fund has outpaced the category in the subsequent years 2019 and 2020. Interestingly, in the volatile 2020, it has managed to deliver return of 27.3 per cent, outpacing the category average returns by 11 percentage points.
While trimming the allocation in the sectors namely consumer non-durables, pharma and petroleum products the fund had upped the allocation in the banks, consumer durables and software sectors over the past eight months.
The fund holds 54 stocks and in which top 10 stocks weightage is 48 per cent in the portfolio. Apart from the top 7-8 stocks the allocation towards other individual stocks is less than 3 per cent of the portfolio and that mitigates the risk. It constantly churns the portfolio and the recent the recently added Larsen & Toubro, State Bank of India and Axis Bank to the top ten stocks allocation. Other top stocks holdings like Infosys, ICICI Bank and HDFC Bank have delivered good returns over the past one year. When compared with the ELSS category, the fund is overweight on financial, technology, automobile and consumer durables and underweight on sectors like healthcare, FMCG and energy.
Fundas
A top quartile ELSS category fund
Delivers stable returns over the long run
Banks is top sector choice now