पत्रिका जगत Positive Journalism
Jaipur, 8th March 2019: As the time passes so quickly, another fiscal year is turning to an end soon, and most of the tax payers must be in the state of panic about keeping the things in order. They might also be planning to approach their Financial Advisor, or Chartered Accountants, to know the different ways which can help reduce tax liability and also thinking how one could reduce the tax loads to the minimum. One can indeed minimize their tax burden but utilizing the various investment options admissible by the government to reduce the tax impact. And one of the most promising avenues is the Equity Linked Savings Scheme (ELSS).
ELSS funds are a category in the mutual fund product basket which allows the investors to reap the multiple benefits of investing. ELSS Mutual Funds are best known for the tax benefits they provide. Further, the advantages of investing in an equity securities are also added to it. Most people compare them with other tax saving instruments like PPFs, NSC, FDs, etc., primarily because of providing similar tax benefits. But, ELSS stands at the top of the list if you compare its multiple benefits with that of the other tax instruments. While, ELSS enables for deduction of up to Rs. 1.50 lakhs on total taxable income each financial year, it is also provides exceptionally great benefit of wealth creation to fulfil one’s future requirements/goals. Also, ELSS comes with shortest lock-in period compared to the traditional tax savings avenues, Lock-in period of 3 years only. This lock-in period minimises the risk of market volatility in the short term, thus ensures the focus on long term wealth creation. It means that one can accomplish multiple targets from a single shot.
UTI Long Term Equity Fund (Tax Saving) is one such offering which is creating wealth for its investor since Dec-1999. The Fund is an Equity Linked Saving Scheme (ELSS) providing dual benefits of sound returns potential by investing in equity securities and also savings on taxes. The Fund has AUM of Rs. 1,072 Crores with over 1.70 lakhs unit holder accounts as of February 28, 2019. The Fund attempts to invest in businesses having healthy return ratios, cash flows and sound management, with an aim to provide superior risk adjusted return.
The Fund is positioned as a multi-cap fund investing across the market capitalization spectrum. The Fund would under normal circumstances allocate 50% to 65% to large cap stocks and the remainder to mid & small cap stocks. Allocation between large and midcap stocks would be based on the relative valuations of the stocks. The Fund would typically have a higher active share in its portfolio led by bottom-up stock picking strategy than by sector allocation in the portfolio construction.
Large Cap portion: Stock picking strategy in the large cap space involves buying business that will continue to exhibit profitability in the long term into the future. These companies not alone meet the basic requirements to be around long enough to create wealth over the investor’s lifetimes but also enjoy sustainable advantages over their competitors or occupy a unique place in their sector which is likely to outlast its peers.
Mid Cap portion: The fund primarily follows bottom-up strategy for picking mid cap stocks. Focus is on the unique characteristics of each of the midcap ideas; businesses with a healthy history of operations but currently facing headwinds, however having a potential for improving performance in the near future. The Fund endeavors to benefit from the expected revival in their business and potential reversion to its mean.
The Fund has about 60% invested into Large Caps and remaining in Mid & Small caps as on February 28, 2019. The scheme’s top holding consists of HDFC Bank Ltd., Infosys Ltd., ICICI Bank Ltd., Axis Bank Ltd., ITC Ltd., Mphasis Ltd., Aditya Birla Fashion and Retail Ltd., Muthoot Finance Ltd., & Maruti Suzuki India Ltd., GAIL (India) Ltd., which accounts for over 44% of the portfolio’s corpus.
The Fund establishes an appropriate amount of risk-return consideration within the portfolio based on style diversification and integrated research process. The Fund endeavours to deliver consistent returns, while emphasising on diversification so as to ride out volatility.
UTI Long Term Equity Fund (Tax Saving) is an ideal fund for investors looking for relatively better possibilities of alpha generation or outperformance over the funds that are large cap biased as the lock-in period of 3 years the fund allows for a longer investment horizon for the portfolio, thus raising the probability of generating superior risk-adjusted returns. Further, investment of up to Rs. 1.50 lakhs in this scheme is eligible for tax benefits under sec 80C of the Income Tax Act 1961.
