DSP Blackrock Tax Saver Fund: A large-cap Tax-saving scheme

The DSP Blackrock Tax Saver Fund was started on January 1, 2013, and is an equity-based mutual fund with a large-cap bias. This also has the added benefit of being a tax-saving investment under Section 80C, of the Income Tax Act. The fund primarily invests its corpus in large-cap companies, but also has a healthy mix of mid-cap and small-cap companies. As the fund is equity-based it is exposed to market volatility and this increases the risk associated with it.

ELSS

The DSP Blackrock Tax Saver Fund is considered an Equity-Linked Saving Scheme (ELSS) under section 80C of the Income Tax Act, 1961. This allows the investor a deduction of up to Rs. 1.5 lakhs on their taxable income, thereby, reducing the overall tax paid by the investor. ELSS is considered one of the best tax-saving schemes as they provide the investor superior returns when compared to other tax-saving schemes like Public Provident Fund (PPF), Fixed Deposits (FDs), National Savings Certificates (NSC), etc. ELSS also carry the shortest lock-in period of any tax-saving scheme, just 3 years.

Liquidity

The DSP Blackrock Tax Saver Fund is an ELSS and therefore carries a mandatory 3-year lock-in. The investor cannot redeem this investment before its maturity. Even though the fund carries a minimum 3-year lock-in period it is advisable to stay invested for a longer period of time, at least 5 years, to see sizeable results due to the effect of compounding returns.

Performance

The DSP Blackrock Tax Saver Fund has been trailing its benchmark index, the NIFTY 500, closely. Over a 1-year investment horizon the fund did not perform well and provides a return of -8.4%, but this fund performs better over longer investment horizons, it gives the investor an approximate return of 11.3% over 3 years and a return of 16.8% over 5 years. The NAV of the fund on December 10, 2018, was declared at Rs. 43.096.

The returns of the DSP Blackrock Tax Saver Fund against the NIFTY 500 TRI and its category has been provided below.

Trailing Returns (%)

3-M

6-M

1-Y

3-Y

5-Y

Fund

-6.55

-4.9

-8.12

11.91

17.04

NIFTY 500 TRI

-7.78

-4.52

-3

12.63

14.04

Category

-7.35

-6.09

-6.98

10.55

15.49

 

Asset Allocation

The DSP Blackrock Tax Saver presently allocates approximately 95% of the corpus in equity and equity related instruments and the remaining in cash or cash equivalent instruments. The allocation of a nominal amount in cash and cash equivalent instruments is to provide the fund with a level of stability during volatile market cycles.

Present asset allocation is represented in the below graph

Equity

95.06

Cash & cash Eq.

4.94

 

Portfolio

The DSP Blackrock Tax Saver Fund is a large-cap-bias fund and invests in relatively stable sectors of the economy. The fund presently invests the majority of the corpus in the Finance sector, and the remaining is invested in the Construction, Technology, Healthcare, Energy and Chemical sectors of the economy. The fund is a moderately diversified fund when compared to its peers.

Peer Comparison

Fund

Rating

Returns 3 Years

Min SIP Investment

Min Lumpsum Investment

Fund Size

In Crores

Mirae Asset Tax-Saver Fund – Direct Plan – Growth

NA

19.13%

Rs. 500

Rs. 500

Rs. 1133.38

BOI AXA Tax Advantage Fund – Direct Plan – Growth

4

11.5%

Rs. 500

Rs. 500

Rs. 193.55

IDFC Tax Advantage (ELSS) Fund – Direct Plan – Growth

5

13.83%

Rs. 500

Rs. 500

Rs. 1688.58

Aditya Birla Sun Life 96 – Direct Plan – Growth

5

14.11%

Rs. 500

Rs. 500

Rs. 6984.25

Axis Long Term Equity Fund – Direct Plan – Growth

5

14.37%

Rs. 500

Rs. 500

Rs. 17626.14

Top 10 holdings

Company

Sector

Value of Holdings (In Crores)

%Assets

ICICI Bank

Banking/Finance

331.26

7.65

HDFC Bank

Banking/Finance

283.68

6.55

HCL Tech

Technology

201.75

4.66

SBI

Banking/Finance

171.66

4.37

Tech Mahindra

Technology

155.19

3.97

Infosys

Technology

189.05

3.58

Larsen

Engineering

127.69

2.95

Bajaj Finance

Banking/Finance

88.85

2.83

Tata Steel

Metals & Mining

122.32

2.39

Bharat Fin

Banking/Finance

103.59

2.05

Sectoral allocation is represented by the below graph

Investment Strategy

The DSP Blackrock Tax Saver Fund is an open-ended equity fund, with a diversified portfolio.

As the fund is an open-ended scheme it allows the Fund Manager to dynamically invest the corpus depending on the prevailing market conditions. The Fund Manager follows a conservative approach to investing, mainly investing in large-cap companies that provide stable returns. Under certain market conditions, the composition of the fund can be changed to have a larger mid-cap component to adapt to the prevailing market conditions.

Fund Manager

Mr. Rohit Singhania

Mr. Rohit Singhania joined DSP Investment Managers in September 2005, in the Portfolio Management Division of the company as a Portfolio Analyst. In June 2009 he moved to the Institutional Equities Team of DSP Investment Managers. Before joining DSP Investment Managers, he worked with HDFC Securities Limited as a part of the Institutional Equities Research Desk. He has successfully managed the following funds for DSP Investment Managers:

1.     DSP Blackrock Tax Saver

2.     DSP Equity Opportunities Fund

3.     DSP Natural Resources & New Energy Fund

4.     DSP India T.I.G.E.R. Fund

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