Why Should L&T Tax Advantage Fund be on Your List When You Think of Tax Saving?

Most of us have already heard the closing bells of the financial year 2017-18, and there might be even some of us who were planning to make last-minute tax saving investments, but failed badly. Choosing the right product for yourself in such a short span is not an easy errand. This is because there are several investment options with varying features and tenures. And, in our rush to select the best financial product, we often miss out on expenditures that can be claimed to save tax instead. 

However, if the experts in the field tell you the way to reach your tax saving goals without letting you wander here & there in search of a reliable option, then the process will become a smooth sail. Well, yes! You heard us right and here is our recommendation. We, at MySIPonline, suggest you to go with L&T Tax Advantage Fund if you wish to make any new investment to save tax for the next fiscal year. 

Now, the question arises, what are the factors that make us so confident about this scheme? If you wish to find out, then go through this post to the end. 

L&T Tax Advantage Fund: Creating Big Differences 

L&T Tax Advantage Fund is an open-ended equity linked savings scheme which is more than a decade old. It has started its journey way back on February 27, 2006, and since then it has managed to provide consistent returns to its investors. The primary objective of the fund lies in generating high gains and long-term capital growth from a diversified portfolio of equities and equity-related securities. The NAV of the scheme amounts to Rs. 54.065 as on March 28, 2018. The total assets under its watch amount to Rs. 2989 crore as on February 28, 2018. The trailing return percentages of one, three, and five years are 18.04%, 13.75%, and 19.66%, respectively. The L&T tax advantage fund has been successful in beating the returns delivered by its benchmark (S&P BSE 200) as well as the category. 

Talking about its asset allocation, more than 97.83% of its net assets are invested in equities and equity-related securities which posses high risk but are capable of delivering an excellent boost to the returns. The remaining percentage is invested in debt instruments and cash & cash equivalents. 

Coming to its portfolio aggregates, the fund’s significant allocation is done in giant and large-cap companies which is around 57.06% of its total equity investments. Here, the mid-cap companies score 32.06%, whereas the small-cap companies consume approximately 10.34% of the total allocation. 

Fund Manager & Investment Strategy 

The fund is successfully managed by Soumendra Nath Lahiri who has over 20 years of experience in the similar field and has been managing and advising on the portfolio for more than nine years now. His distinct style of investment makes him stand out among its peers, but that also adds an element of key-person risk. The investment strategy is such that the fund manager finds companies through bottom-up stock picking approach. The portfolio depicts his high-conviction stock picking style which majorly includes companies backed by strong promoters and that are efficient capital allocators. 

Key Advantages of Investing in L&T Tax Advantage Fund 

1. Dual Benefits: Being a tax saving option, it acts as an excellent tax saver under Section 80C of the Income Tax Act of India, 1961. Secondly, it is considered as a smarter investment option for the future. 
2. Three-years Lock-in Period: This period being much-shorter than most of the investment options that qualify for tax saving deduction under Section 80C makes L&T Tax Advantage Fund an attractive option for the investors. The lock-in helps the fund manager to maximize potential returns from equities.
3. Small Investments, Big Profits: In this ELSS scheme of L&T Mutual Fund, the investment installments can be planned as a part of the monthly budget by opting the route of SIP. 
4. Greater Diversification for Better Risk Control: The fund manager of L&T Tax Advantage Fund believes in following ‘go anywhere’ approach. Thus, he has shown no bias towards any sector, style, or capitalization. 

What Should an Investor Do?

Although there is nothing wrong with saving tax through involuntary expenses or means, it's always rewarding to have a financial plan in place and choose tax-saving options in sync with your goals. After all, saving for a long-term goal by using the tax breaks is what you should do. Further, you should ideally start tax-saving at the beginning of the financial year. So, this scheme can be an ideal choice for investment for all those who are willing to seek profits by saving taxes in the next financial year. 

In case you wish to seek a personalized recommendation on this, connect with us via email or phone call. We, at MySIPonline, will be happy to serve you with all we have.