Franklin Taxshield Fund

Launched in April 1999, the Franklin Taxshield Fund has been ranked 2 under CRISIL Fund Rank, for the quarter ended September 2015, in the Equity Linked Savings Scheme (ELSS) category. Managed by Anand Radhakrishnan, the fund’s quarterly average asset under management (AUM) stood at Rs 1,834 crore at the end of December quarter. It has remained in the top 30 percentile of the peer group (CRISIL Fund rank 1 and 2) for last four consecutive quarters.

The primary objective of the fund is to provide medium to long term growth of capital along with income tax rebate. The fund seeks steady growth by maintaining a diversified portfolio of equities, across sectors and market cap.

Under the ELSS category (under Section 80C of the Income Tax Act), investors can claim income tax deduction on investments up to Rs 1.5 lakh.

Superior performance

Since inception, the fund has given promising returns of 24.84 per cent (CAGR) vis-à-vis 14.17 per cent by the benchmark (Nifty 500). The fund has constantly outperformed both its benchmark and category, across various time frames (see chart).

Comparison of the fund's performance across various market phases reveals the fund has outperformed its benchmark and delivered comparable returns vis-à-vis the category during the bull phases. During the bear phases, crisis and economic slowdowns, the fund has successfully managed to mitigate losses, largely in line with its peers and the benchmark.

An investment of Rs 1,000 at inception would have grown to around Rs 41,217 by January 12, 2016, an annualised return of 24.84 per cent vis-à-vis the peer group’s 21.18 per cent (Rs 25,030) and the benchmark’s 14.17 per cent (Rs 9,225).

In terms of monthly systematic investment plan (SIP) of Rs 1,000 over 1, 3, 5, 7 and 10 years, too, the fund has delivered superior returns (see table) vis a vis the benchmark. Compared to the category, it has delivered higher risk-adjusted returns as measured by Sharpe ratio of 0.60 versus 0.49 for the category while being less volatile (beta of 0.84 versus 0.91 for the category) for the three years period ended January 12, 2016.

Portfolio analysis

Over the last three years, the fund, on an average has 69.5 per cent exposure to large cap stocks and 24.78 per cent exposure to small and mid-cap stocks. The fund has consistently held 26 stocks, with Infosys, Bharti Airtel, HDFC Bank and ICICI Bank among the top holdings, with a combined average exposure of 22.68 per cent. During the same period, at a sectorial level, the fund, on an average, has maintained high exposure to banks (23.67 per cent) followed by pharmaceuticals (10.54 per cent), software (9.70 per cent), telecom service (5.95 per cent) and auto ancillaries (5.94 per cent).