United Breweries, with a standalone weightage of 8.72%, is the largest holding of the fund, followed by Larsen & Toubro and Housing Development Finance Corporation.
The fund is one of the best performers among equity-linked savings schemes (ELSS). It generated a one-year return of 46%, at a time when the benchmark it is pegged to - the BSE 200 - was up 39.5%, and the peer group returned 34%. Over three years too, the fund was able to beat both its benchmark and its peers.
The fund has a large-cap bias, with 71% of its portfolio in large-caps, 13% in mid-caps and 14.8% in small-caps. United Breweries, with a standalone weightage of 8.72%, is the largest holding of the fund, followed by Larsen & Toubro and Housing Development Finance Corporation, each with a 5.17% weightage. The top five equity holdings contribute around 30% of the overall portfolio.
Birla Sun Life Tax Relief 96 Fund is also well-known for its handsome dividends. In financial year 2006-2007, it paid out a 1010%, which is the highest by any single scheme. However, investors should keep in mind that mutual fund dividends are different from stock dividends. The net asset value of the scheme falls by the extent of the dividend once the dividend is paid out.
Therefore, by giving out a dividend, a fund house is essentially returning an investor’s own money to him, including any capital gains that may have accrued. This dividend becomes advantageous because ELSS schemes have a three-year lock-in, which means the only way to liquidate at least part of one’s holdings is through this dividend paid out from time to time.
The fund has also grown its assets under management. Over the last one year, AUM has grown 770%, the highest among ELSS schemes. In AUM growth among ELSS schmes, Principal Personal Taxsaver comes in next, with a growth of 230%.
The main concern for investors in Birla Sun Life Tax Relief 96 could be that the scheme has not diversified much. It has restricted investments to 16 sectors, with the maximum weightage given to the financial services sector, at 14%, followed by the banking sector, at 13%. Overall, the top five sectors account for almost 60% of the portfolio.
By arrangement with mutualfundsindia.com, a unit of Icra Online
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