HDFC TAX SAVER (OLD WAR HOUSE)

An exemplary track record and a highly reliable fund house make HDFC Taxsaver one of the best in its category. But when a new manager came at its helm, all was not so honky dory for the fund

This fund has a knack for making the competition look silly.

Its rating has never gone below four stars in its rating history of 100 months. Since November 2004, it has steadfastly held on to a five-star rating. Known for its astute stock picking and stellar performance, it has also shown resilience while protecting the downside time and again.

But despite being a compelling tax-saving option, it has stumbled a bit lately. Vinay Kulkarni took over from Dhawal Mehta in November 2006. The timing could not have been worse.

The market dipped in the first quarter of 2007 and the new fund manager had the task of living up to his predecessor's astuteness and investors' expectations. During this time period, the fund dropped to the last quartile of the category, losing 8.62 per cent vis-à-vis an average peer's loss of 6.45 per cent.

Once at the helm, Kulkarni made a couple of visible changes to the portfolio. Exposure to auto and construction stocks was significantly lowered while notable positions were built in sectors like energy, banking and services. The increased investment in Reliance Industries and banking stocks proved rewarding but the higher allocation to technology has dented performance.

Though held in high regard, as far as the category of tax-planning funds is concerned, the fund is not completely out of the woods. But going by its great performance history and the reliability of the fund house, this fund remains a keeper despite its recent setback. Just be more watchful over the coming months.

(by value research)

Dividend Announced under Three Schemes of Tata Mutual Fund

Tata Mutual fund has announced a dividend of 10 per cent, 10 per cent and 30 per cent under Tata Contra Fund, Tata Dividend Yield Fund and Tata Tax Saving Fund, respectively. The record date for the same is December 14, 2007.

(by value research)

Dividend Announced under Four Schemes of ICICI Prudential

ICICI Prudential Mutual Fund has announced a dividend of 10 per cent, 10 per cent, 12 per cent and 20 per cent under ICICI Prudential Fusion Fund, ICICI Prudential Fusion Fund Series II, ICICI Prudential Discovery fund and ICICI Prudential Growth Fund respectively. The record date for the same is December 14, 2007.

(by value research)

How's DSP ML World Gold Fund?

Dhirendra Kumar hosts a weekly TV programme where he answers questions related to mutual funds. We have briefly reproduced the transcript here.

Name of programme: Fund ka Funda
Time of programme: 1.30 pm/Sunday
Channel: Star News

Q. How is DSP ML World Gold Fund?
A. The fund has been launched recently in August 2007 and doing very well. It could be a good diversification beyond domestic equity.

Q. What is fund of funds? Is it a good option to invest? If yes, please suggest a good fund of funds.
Vidula Vyawahare
A Fund of Funds (FoF) is a mutual fund that invests in other mutual funds. It is a basket of mutual fund schemes that can invest in equity and debt schemes. They all are relatively new.

Q. I have invested Rs. 40,000 in SBI Bluechip Fund. Should I redeem on a rally or stay invested?
A. SBI Bluechip was launched last year and has given decent returns in one year. If you are a long term investor, you can shift to better performing, rated funds.

Q. I want to invest Rs. 50,000 in mutual funds. Should I wait for markets to fall? Also, should I do a one time investment or split it over months?
A. You should not time the market and split your investment in 6-12 months in a five or four star rated fund like HDFC Equity, Reliance Vision or Franklin India Prima Plus.

Q. I want to invest Rs. 70,000 each for 3 years in DSP ML T.I.G.E.R Fund and JM CONTRA Fund. Are these worth investing?
Dr. Fahim
A. JM Contra is a very new fund and it is too early evaluate its performance. You can invest in DSP T.I.G.E.R fund with a long term view.

Q. Suggest some good life insurance plans which can give me good returns.
A. Life Insurance Plans do not generate high returns. It's better to invest in mutual funds and take a term plan for life insurance.

Q. What is the future of ICICI Prudential Infrastructure Fund? Should one redeem his investment?
A. ICICI Prudential Infrastructure is not a very old fund, though it has been a consistent performer. It's a sectoral fund and you can exit on a rally if you are not a very long term investor.

Q. I would like to invest in Fidelity Mutual Funds with a long term view. Which is better - Fidelity India Special Situation fund or Fidelity Equity fund?
Haresh B. Chatwani
A. From these two, you can opt for Fidelity Equity Fund. It has done well till now.

Q. It is said that mid-cap funds tend to become unmanageable and hence dangerous when the AUM becomes too large. How do we know how much is too much?
A. Yes. Mid-cap funds struggle to perform beyond a certain size. I guess a size beyond Rs. 2000 crore is an impediment to the performance of a pure mid-cap fund.

(by value research)

Will Infra Funds Run?

Dhirendra Kumar hosts a weekly TV programme where he answers questions related to mutual funds. We have briefly reproduced the transcript here.

Name of programme: Fund ka Funda
Time of programme: 1.30 pm/Sunday
Channel: Star News

Q. How is SBI Infrastructure Fund? Is it performing well?
A. SBI Infrastructure is an infrastructure theme fund launched in June 2007. It is a three year closed ended fund which has done reasonably well till now.

Q. I have invested Rs. 3,000 pm in last 1 year in SBI Magnum Tax Gain, HDFC LT Advantage Fund and Franklin India Taxshield. Should I continue investing in these?
A. All funds selected by you are top rated good funds performing well. Continue investing.

Q. When is the right time to invest in mutual funds? What happens when the market declines?
A. It is always a good time to invest in equity funds if you are investing for few years. Funds also fall when market falls, but over time equity proves to be best performing asset class.

Q. Which is the best mutual fund in banking/financial sector and power sector?
Yogesh Mathur

A. There are only two banking funds -- UTI Banking and Reliance Banking Fund. The only fund which invests in power sector stocks is Reliance Diversified Power Fund.

Q. I have started investing Rs. 1,000 through SIP in Kotak Tax Saver. How much return can I expect in 10 years?
K.K.Mishra
A. It is difficult to guess the return from your fund over the next 10 years. Kotak Tax Saver is a relatively new fund and you can think of investing in ELSS funds like SBI Magnum Tax Gain, HDFC Tax Saver or Sundaram tax Saver.

Q. What is the future of UTI Life Style Fund and HDFC Top 200 fund?
Anil Dwivedi
A. HDFC Top 200 is a well diversified equity fund with good track record, a 5-Star Rating and good potential. UTI Life Style fund is a very new fund launched in July this year. Stay invested for some time and then evaluate its performance.

Q. I want to invest Rs. 10,000 each in HDFC Equity Fund and Sundaram BNP Paribas India Leadership fund for next 5 years. Is my decision right?
A. Both are well performing funds. Invest in both.

Q. I am investing Rs 1000 each in HDFC TOP 200 fund and Franklin India Flexicap fund through SIP for 3 years. Are these good funds?
A. You have build a portfolio of good funds. Continue investing.

Q. Is Reliance Automatic Plan Suitable for investment? What will be the return after 8 years for the investment of Rs 10000 per year?
A. Reliance Automatic Plan is a ULIP plan and its better you opt for a Term plan for insurance and invest the remaining in mutual funds. It is not possible to estimate returns after 8 years.

Q. In view of Infrastructure growth story, I want to invest Rs.10,000 pm through SIP for 2-3 years. Please suggest BEST amongst UTI and TATA Infrastructure Funds.
Swapnil
A. Opt for the UTI Infrastructure Fund. It is a five star rated fund and has been a consistent performer.

(by valueresearch)