January to March is a tax-saving season for the organized sector in India. Following this, many people in the country start looking out for investment options to save on taxes for the financial year. Section 80C of the Income Tax Act, 1961 has enumerated several tax saving options, and tools individuals can use to reduce their tax liabilities. Some may invest in insurance policies, while others might invest in post office deposits which generally have a lock-in period of 10 years. However, out of all the tax-saving options available, the equity-linked saving scheme or ELSS as they call it is known to be the most popular instrument. MATS or Mirae Asset Tax Saver Fund is the most preferred open-ended equity-linked saving scheme. This ELSS comes with a compulsory 3 year lock-in period.
Mirae Asset Tax Saver Fund is a precious tax-saving fund for investors looking for investing with a long term growth in mind. Here are a few reasons why investors should choose the Mirae Asset Tax Saver Fund:
1. Talking about diversification, MATS Fund has you covered
Mirae Asset Tax Saver Fund is a large capital equity-linked saving scheme. Currently, around 75 percent of the portfolio of the MATS fund is divided between the large caps and the giants. Approximately 20 percent of the collection is in mid-caps and around 6 percent of the portfolio is allocated to small caps, according to the Valuesearch website.
2. Good returns expected with top sector apportionments
Banks form around 28 percent of the portfolio, the software industry forms 9.9 percent of the portfolio, Non-durables and construction sector forms 8.68 percent of the portfolio, and petrol products form 6.53 percent of the portfolio. These sectors collectively form 50 percent of the total exposure in the equities. The returns in the Mirae Asset Tax Saver Fund will be determined by the performance of these sectors in the future.
3. Commendable exposure and potential companies involved
Future returns are also determined by the percentage of exposure the fund has to several companies within the industry. The top five companies involved in MATS are as follows:
A. HDFC BANK has the highest exposure. Around 8.62 percent of the total equity, apportionment is formed by HDFC bank.
B. Reliance Industries Ltd. has 5 percent of the total equity allocation
C. ICICI Bank has 4.76 percent of the total equity allocation
D. Kotak Mahindra Bank has 3.97 percent of the total equity allocation, and
E. Tata Consultancy Services (TCS) has 3.66 percent of the total equity allocation
This exposure to big companies also plays a very significant role in determining the returns on a fund. This factor again makes Mirae Asset Tax Saving Funds one of the most suitable options for investment
4. Beating the Benchmark
Mirae Asset Tax Saver Fund had its inception in 2015. Therefore, it does not have a very long track record history. However, a good yardstick to measure the performance of a scheme is to look at its consistency in meeting the benchmark figures. MATS has proven to beat its benchmark since 2015 consistently. This factor gives investors a sort of confidence in the scheme
5. Appreciable returns since inception
The returns of MATS funds are compounded annually. The benchmark was set at 13.03. Here’s are the details:
A. Mirae Asset Tax Saver Funds (MATS): 18.91 percent
B. Benchmark: S&P BSE 200 (TRI) : 13.03 percent
C. Additional Benchmark: S&P BSE Sensex (TRI): 13.45 percent
6. Recent Accomplishments
As mentioned earlier, MATS fund does not have a very long history report, however, in this short span of 2 calendar years, the fund has crossed the benchmark in 2016 as well as in 2017. The fund has witnessed market fluctuations and has still managed to generate returns of 14.80 percent in 2016 against the benchmark of 5.08 percent. Similarly, in 2017, the fund yielded returns of 47.88 percent against the baseline of 35.21 percent. This performance again helps the Mirae Asset Tax Saving Fund to gain the confidence of new investors
7. A strategy like none Other
As disclosed by the fund house, the Mirae Asset Tax Saver Fund does not have any specific theme or style bias. This feature will give the scheme a diversified nature. Also, it has been said that the portfolio will consist of firms that have sturdy business models and have healthy competition in the industry and a good return ratio
Apart from the benefits mentioned above, the Mirae Asset Tax Saver Fund (MATS Fund) has only 1.2 percent as cash holding, and the rest 98.80 percent of the fund’s entity is invested in the equities. In case the market falls, the loss in this scheme will be limited, and any improvements in the market will help this almost fully invested scheme. A good knowledge of this scheme’s benefits, costing and its consistent performance since inception are good reasons for investors to consider investing in it.