Within the scheme's sector allocation, the percentage of exposure to various companies will also play its role in generating future returns.
It’s the tax saving season ( Jan till March end) and many of us would be looking to invest in a tax saver to reduce the tax liability for the financial year 2018-19. There exists several tax saving options that come with tax benefit under Section 80C of the Income Tax Act, 1961. However, for many tax savers, especially the millennials, the equity-linked saving scheme (ELSS) remains a popular market-linked mutual fund investment.
Here, we look at Mirae Asset Tax Saver Fund (MATS) which is an open ended ELSS and like all such schemes, it comes with a 3 year lock-in period.
Before one invests in any ELSS, there are quite a few things apart from performance that needs a look. It helps to make an informed buying decision and also help avoid duplication. The reason to diversify will get negated if one invests in more than one ELSS which are all large-caps or have exposure into similar sectors.
Know how diversified the scheme is
MATS, is a Large Cap ELSS and as per data on the Valueresearch website, currently the fund has about 74 per cent of its portfolio divided between giant and large-caps, 20 percent in mid-caps and nearly 6 per cent allocation to small-caps.
Know the top sector allocation
The four sectors/industries that make about 50 percent of the portfolio are – Banks with 27.95 percent , Software with 9.9 percent , Construction non-durables with 8.68 percent and petrol products with 6.53 percent of the total exposure in equities. How these four sector fare in the future will go along way in determining the returns in the scheme.
Know the top 5 holdings
Within the sector allocation, the percentage exposure to various companies will also play its role in generating future returns. Here are the top 5 companies in terms of equity exposure in MATS.
The maximum exposure is in HDFC Bank with nearly 8.62 percent of total equity allocation. The other primary holdings includes – Reliance Industries Ltd 5.00 percent, ICICI Bank 4.76 percent , Axis Bank 4.08 percent, Kotak Mahindra Bank 3.97percent , Tata Consultancy Services 3.66 percent
Know the performance
One of the yardstick to measure a mutual fund scheme’s performance is its consistency in beating its benchmark over a long period. Although, MATS doesn’t have a long track history (inception in December 2015), it has comfortably beaten its benchmark since inception.
Returns since inception ( Compounded annualised)
MATS : 18.91 percent
Benchmark: S&P BSE 200 (TRI) : 13.03 percent
Additional Benchmark: S&P BSE Sensex (TRI): 13.45 percent
Recent returns: The fund has a small history and has witnessed the ups and downs of the market only for two full calender years till now. As per Valueresearch, the fund had comfortably beaten its benchmark both in calender year 2016 and 2017. In 2016, MATS generated 14.80 percent against benchmark return of 5.08 percent, while in 2017, it yielded 47.88 percent as against 35.21 percent by the benchmark.
Know the scheme’s strategy
As per the fund house, the scheme will not have any bias towards any specific theme or style, thus giving it a diversified nature. Further, the fund Fact Sheet, discloses that the portfolio will comprise of companies having a robust business model and enjoying sustainable competitive advantage with high return ratios.
Know the fund manager
Since its inception in December 2015, MATS is managed by Neelesh Surana. He is also the fund manager for quite a few other equity schemes of the fund house including Mirae Asset India Equity Fund ( since May 2008) and Mirae Asset Emerging Bluechip Fund (since Inception in July, 2010)
Know the basic features*
Inception Date: 28 December, 2015
Benchmark Index: S&P BSE 200 (TRI)
Net AUM: Rs 1,206.68 Crore
Direct Plan: 0.35%
NAV (in Rs)
Growth Option: Direct Plan: 17.255 Regular Plan: 16.598
Dividend Option Direct Plan : 15.289 Regular Plan : 14.618
*As per fund fact sheet Nov,2018
What to do
In nutshell, MATS is a large-cap oriented ELSS with primary exposure to financial and Software sectors. As on Nov 30, 2018, MATS had a cash holding of only 1.2 percent with 98.80 percent of fund’s corpus invested in equities. The advantage to buy at lower levels if the market falls will hence be limited although fresh inflows will shore up the investments. On the other hand, any rally in the markets from these levels will help the scheme as it almost fully invested.
The expense ratio of the Direct Plan is considerably low at about 0.35 percent compared to the Regular Plan. Needless to say, the former under the growth option should be one’s route to invest if one decides to go ahead. And now, that you know the costing of this ELSS, which sectors and companies it invests in and its market-cap orientation, you may consider investing in Mirae Asset Tax Saver Fund, it being a decent consistent performer.