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Fund Pick: Tata Tax Saving Fund

Background

Tata Tax Saving Fund, a tax-planning equity was initially launched as a closed-end fund and converted into an open-ended fund effective April 1999. The fund had declared a 20% dividend in June 1999. The fund is available on a no load basis.

Performance

Tata Tax Saving Fund has given an annualised return of 51.41% since launch, and in the past one year ending 30th November, 1999 returned 232%, and ranks #1 among only four open-end tax saving funds with over one year track record. The fund was launched when the market was in a strong bear grip and the fund barely managed to guard its assets in the freely falling market. However, it lagged far behind the markets during the brief upsurge of January-August '97. The fund was a late is assuming significant exposure in the select sector stocks in Software, Pharma and FMCG. These sectors became visible in the portfolio only from March 1998. But then on it has continued to retain them to the extent of 75%-85% of the net assets. The fund churned out good performance figures riding the momentum in these select sectors. However, it missed the rally in the cyclical stocks during the 2nd quarter of the year. The fund has also consolidated its positions in fewer stocks in these sectors. As on date the fund is spread over around 20 scrips as against 50 as on March 98. And of late the fund has pruned its position in FMCG stocks altogether and increased its allocation to software stocks, which accounts for 60% of the portfolio. Media stocks, another prominent new position accounts for 17%. The actively managed fund is not only sector specific but also market specific as can be interpreted from the exit out of the FMCG sector, which of late has taken a beating on the bourses.

Outlook

Given the bright outlook for the sectors and select stocks therein, the fund is suited for investors with an appetite for a volatile fund. The fund has declared another tax-free dividend of 20%, which can be availed of by the investors investing by 14th January 2000. Besides, the tax rebate of 20% and no load offer adds to the yield. However, investment made will have to be locked-in for a period of three years. The three-year lock-in will mitigate the volatility.

FUND BASICS
Objective	Size	NAV:10/12/99	Exit Price	Entry Price	Tot Ret
Taxplanning	41.37 cr	38.64	38.64	38.64	51%
BENCHMARK COMPARISONS (%)					30/11/99
	1M	3M	6M	1Yr	3Yr
Fund	43.2	49.5	111.1	231.8	66.8
Sensex	4.0	-5.8	16.6	60.4	16.9
Nat. Index	4.4	2.5	31.5	75.4	20.6
Obj. Avg.	8.7	13.7	41.5	83.2	14.4
TOP HOLDINGS (30/11/99)			Mkt.Val(cr.)		Net Assets %
Visualsoft ( I)			966.32		27.71
Zee Telefilms			601.20		17.24
Dr. Reddy'S Laboratories			289.44		8.30
Ranbaxy Laboratories			272.01		7.80
Sonata Software			246.90		7.08
Fujitsu Icim			187.96		5.39
Satyam Computer Services			180.29		5.17
Hoechst Marion Roussel			152.04		4.36
Infosys Technologies			124.84		3.58
Software Solutions			118.57		3.40
P S I Data Systems			117.87		3.38
Pentafour Software			108.45		3.11
Motor Industries Co.			53.01		1.52
Tata Elxsi (India)			32.08		0.92
BPCL			15.00		0.43
Tata Finance Ltd.			12.90		0.37

Mutual Funds

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